For those in the financial services world who ignore the rise of fintech, the head of a financial giant has a message. Recently, Jamie Dimon, the CEO of JPMorgan Chase had this to tell his management about the fintech industry: Be scared.
The fintech businesses aren’t on the horizon. They are here, upending traditional norms of finance. PayPal, Stripe, Amazon, Square, Google, Apple, Alipay, and WeChat Pay are reinventing all aspects of finance, from banking to insurance to stocks to payment.
What is fintech?
At the heart of it, fintech is the coming together of finance and big tech. It automates several financial processes using Artificial Intelligence, data science, and machine learning algorithms. This enables consumers to transact faster, when and from wherever they like it.
Fintech companies use digital technologies to offer their products and services without relying on brick and mortar branches. A smartphone can become a bank, cashier, lender, broker, or insurer. In other words, fintech is on-demand finance driven by technology.
The advantages of fintech
With mobile banking, a consumer doesn’t have to visit a bank branch. With online trading, an investor doesn’t have to rely on others to trade for him. With digital lenders, a consumer’s credit score can be analyzed and loan dispersed in a matter of minutes.
That’s the reason the future belongs to fintech. It has put the user in control and given them unprecedented freedom. They don’t have to approach a financial firm for a service. The firms are at their beck and call.
Without the need for traditional physical infrastructure, fintech companies can save a lot on needless investments. They can then transfer those cost-efficiencies as savings to their customers. The technology also allows them to scale at exponential speed.
Finance was a seller’s market for centuries. Fintech is making it a buyer’s market. The ones who survive will be the ones who adapt.