Whether all Fintech should be considered disruptive innovation or not is a matter for debate, according to well-educated writers at The Harvard Business review. But it doesn’t take an Ivy League education to recognize that many of the new FinTech technological innovations in the finance sector are sending tremors across the industry. Old-fashioned practices like going to the bank are being superseded by online transactions using hand-held devices. And there’s much more.
There is nothing narrow in the definition of Fintech. The term can apply to any technology solution used to deliver financial services. According to Investopedia, Originally thought of as “FinTech technological innovations applied to the back-end of established consumer and trade financial institutions, ” now the word is used to describe any technological innovation in the financial industry.
A Broad Impact
FinTech has been around for a long time, working in the background to support banks, trading companies, insurers, and other financial institutions. Now FinTech technological innovations include platforms that manage end-to-end processes like the interaction of users on their smartphones. The aim is to use technology creatively to make life better.
A simple example is online mobile banking. Most banks now allow customers to log in to their accounts through a secure website or app. This capability alone has changed the way people do their banking. Online banking means customers can check balances, transfer money, or pay bills without ever stepping foot into a bank lobby. And the ubiquity of credit or debit transactions in stores eliminates the need to withdraw cash at the bank or an ATM.
We’ve been using Fintech for a while now. An article on “The Evolution of Fintech” in Forbes says that Fintech is “a very broad sector with a long history”. That history includes credit cards, ATM machines, bank mainframes, e-commerce, trade processing, and data analysis. We can even go back to Friday, October 15, 1954, when history's first automated payroll checks were printed by the UNIVAC machine, as I described in "Milestones in Digital Computing".
Today, Fintech is apparent in technologies that we use every day. In an article about the evolution of Fintech, ComputerWorld gives the examples PayPal, Apple Pay, Google Wallet, Charles Schwab, TD Ameritrade and Fidelity Investments. But that just scratches the surface. For a bigger list, take a look at "The Fintech 50: The Complete List 2016". These financial technologies may not currently be on your radar, but maybe they should be.
Fintech expert Alex Rampell discusses “The Future of Money: Banking on Fintech” in a YouTube video. He says that millennials don’t want to talk on the phone or visit bank locations. They are used to doing everything on their smartphones. Rampell says that services such as core banking, new financial products, insurance, and investing are being addressed with Fintech solutions. The four main debt categories, credit card, mortgage, auto loans, and student loans, will also have apps that are widely adopted.
Other predictions about the future of FinTech technological innovations and banking, such as this video from Avonade and another from Newgen software, might make you wonder if the technology might become a bit too intrusive. But those things will be worked out in society and in the marketplace. A special report from the Financial Times on the future of Fintech might be a better place to start.
Another way to look at it is to say that the future is not that far off. Using the smartphones and other computing devices that we already possess, financial service providers can easily make their offerings available through a simple app. And they are already doing that. The question remains whether we are prepared to entrust our financial transactions to them.
A Fintech Primer
We said that Fintech has a broad definition. Every technology has its own language with its own special terms. We won’t cover them all here because the work has already been done for us. CNBC has done a fine job in defining Fintech terms in their article "Everything you've always wanted to know about Fintech". Some of the terms covered are:
And you might be wondering about the spelling of the word we have been describing. I’ve seen Fintech, FinTech, or fintech. I’m not sure that there is any accepted spelling as of yet.
Some people may wonder when we will start using Fintech, but the answer is that we already are. The financial technology that we have been using for years -- including credit cards and ATM machines -- may not have been called Fintech, but the definition applies. You can probably think of many others in your daily experience. As with any technology, there is more to it than creating the ability to do something. It all comes down to which Fintech apps are widely adopted in the market place, and how financially successful those FinTech technological innovations and solutions become via artificial intelligence and predictive analytics.
NextGen has provided executive search services for companies that need software engineers who design blockchain elements, machine learning data intelligence, and data analysts who have a financial background in big data. Give us a call today at (650) 351-7701.
Mention a paper check to a Millennial, and you are likely to get blank stares. Before we address the benefits and pitfalls of mobile payments, first we must acknowledge that the idea of writing anything on a slip of paper for a payment is as anathema to them as a rotary phone.
ow, the ubiquitous debit card may also be on the way out as mobile payments via older NFC such as Apple Pay and the new Google Pay, which combines Android Pay and Google Wallet (although the P2P transactions mysteriously are missing) and newer magnetic secure transmission (MST) like Samsung Pay service that uses both NFC / MST and works everywhere to transmit payment information
The more common NFC is the same technology found in Apple Pay and Android Pay, where payment information is securely transmitted between an NFC chip (found in the smartphone) and an NFC reader (usually installed near the point of sale machine) becomes more and more commonplace for transactions. But Samsung Pay with both NFC and MST has several advantages over the other two competing technologies.In a similar trend, shopping for groceries or in drugstores have changed as well. Most places require you to have a “shopper’s card” of sorts to receive the sale prices and values on posted items in the store. This also has changed the face of shopping, mostly in the favor of the retailer than the shopper, but in truth both can benefit from this. This article will look at each of these mobile payment systems along with the benefits and pitfalls of mobile payments.
Imagine leaving the house without your cell phone. It is no doubt you have instinctively just reached to check for it. Forgetting a cell phone today is almost taboo, and for the shopper, this is a true advantage. To pay for almost anything from a movie ticket to gas, wave the phone near the NFC symbol on the transaction terminal; the purchase is made quickly and easily.An added advantage is a paperless form of transaction. More and more people are paying bills on line and eschewing the postal service for monthly bills. Some choose to directly draft everything from mortgages and car payments to child support and utility payments. Receipts and bank information is posted immediately, while technologically-savvy check their banking on line or via an app.Those who cards are afraid of theft will find much of the NFC and MST technologies are highly secure and are easily turned on and off as necessary. Those who fear their information may be compromised will find stopping payments or canceling the card as difficult as a swift tap on an app. All that is needed is a LTE, data or wireless connection to make it happen.Another huge advantage is you can add all the major credit cards as of fall 2016, many bank credit and debit cards, gift cards, and member cards as well. With my Samsung Galaxy S8/9 Edge, I added BJs warehouse, Big Lots, CVS Pharmacy, Best Buy, Lowe’s. Walgreens, and Office Max – just to name a few. I simply put my phone over the credit card terminal and no longer have to pull out or even carry these cards in my wallet. And yes, thank goodness my wallet is now thinner and not causing a curve in my spine.Around the turn of the millennium, stores, particularly grocery chains, shifted from strict advertising sales to a card-based savings system. Signing up for the card was free and necessary to receive the sales benefits. It was slow to receive acceptance, but once the movement caught on, it was quickly accepted as the norm. More and more industries followed suit, and now most all chain store businesses have a card program.The card savings system seems to be troublesome to some, as it may lead to more collected information than some may like. The fear of ‘Big Brother’ has many nervous, although giving personal information is not necessary and there are ways around the majority of the requirements to receive the card and/or benefits.The other benefits and pitfalls of mobile payments deals with these cards often offer special deals and loyalty points for customers who shop regularly. Benefits such as cash savings, points shaved from gasoline costs and free items are only a part of the many choices available. The data the chains receive from the shoppers actually benefits the shopper as chains are more likely to have certain items on sale more frequently, including meats and high cost dairy, i.e. milk. Millennials and Generations X and Y are certainly comfortable with NFC and modern technologies, but as the Baby Boomer Generation grows older and more and more removed from modern technological advances, convincing these generations to trust NFC is difficult. The fear of card readers or identity thieves taking personal information by simply walking near someone is virtually impossible. Convincing them, however, of this fact may prove to be a serious uphill fight.The card program too has its flaws. Many are reluctant to sign up but often feel forced. This can create resentment of the business, even in the face of good benefits and values. More still do not like the idea of filling a wallet with additional cards, particularly for cards used rarely.
Note, however, the disadvantages of both are minor and can easily be overcome through simple education. For businesses to move to paperless, checks and account balance information, and card loyalty programs, each must aggressively market to those groups who are most reluctant to make these changes. Commercials and videos explaining the benefits while simultaneously downplaying the potential downfalls is vital to success. Fear of identity theft may be slightly more difficult to win people over but promises of insurance and security are often enough to assuage fears. Your thoughts on this issue are appreciated – what is your opinion on the benefits and pitfalls of mobile payments?
With more than 30 years of recruiting for MNOs, digital media, and mobile payments platform vendors, NextGen has worked for many US and European based banks. mobile payment platforms, ecommerce platforms, and security vendors for fingerprint and credit card encryptions development. Our forte is in recruiting senior executives and functional leaders in sales, business development, ecosystem partnership development, software design and development, and product management. Click on the link below to learn more about our expertise in wireless infrastructure, mobile networks, and digital media recruitment.