FinTech– A buzz word used by almost every financial services player. Also, many players who are entering into payments arena of FinTech domain are actually coming out of this game park with zero or no knowledge. We will attempt to find responses for below questions in our post.
- What sort of story they make or write
- What benefits it will provide to businesses and end customers
- How new services will change the world which is coming out of IoT, FinTech, AI, Blockchain and Machine Learning combinations.
Businesses entities like banks, MNO and financial services institutions will be forced to transform with these developments anyways. More details about my posts, subjects and relevance please read the disclaimer.
Why FinTech – Show of today’s time
If we track of all the mobile payments announcements will realize; almost every day a new FinTech company is getting born. To top-up, the excitement; almost every new player joining payments business is coming from outside of the financial services domain. They come with no industry experience but has high energy & are inspired to become a FinTech company with IoT vision.
This is giving too much innovation to put the idea on the table but takes longer to make it the reality. Technical companies entering the financial domain and making it interesting by doing technical integration, or “fintegration”, of FinTech services, the latter interfacing directly to bank customers for banking services.
FinTech is now joining hands with IoT to bring more and more new services. Payments look really easy to all new FinTech companies as they keep rolling “Fintegration”, which is why innovation is hard but now IoT joining hand with FinTech to bring easy and cheaper solutions to market.
FinTech – IOT and Data
Imagine one is on way to the hospital due to some illness and the smart wearable device detects health to notify the hospital to prepare before the person arrives. On way your smart device sends information like medical history, banking details and current issue one is facing; by the time patient arrives at hospital depending upon seriousness everything gets ready for reception.
In the side smartwatch also sends a signal to your wallet or bank account to ensure liquidity is ready as well. All your treatments get paid in auto mode and you come back well and healthy without getting into the hassle of running with bills to clear or medicine prescription to buy them from the store. Life anyways will not remain the same 5 years down the line from now at least for those who are able to earn their basics with little luxury without much issues or hassles.
Payments & FinTech
In developed economies, payments work really well, fast and very efficient. Consumers walk up to a point of sale terminal in a store or to ATM machines to withdraw cash/swipe their plastic; the transaction goes through in a matter of milliseconds.
What could be so hard about that? Why do we need Mobile Payments or FinTech Payments or IoT based payments well answer lies in the last paragraph itself? Hope you got it. It’s trying to solve for a payments problem that really doesn’t exist today – and then do that at scale. We all know giving innovators access to capital – with interest rates on money near zero does not make any sense even. Neither it’s ever been easier to access freely.
Faster payments is a solution to which problem does anyone really know or ever thought of. New challenger banks and FinTech companies will most probably focus on a single high-value financial offering, allowing them to establish a clear price or quality differentiation from a broad commercial bank. The emerging IoT based FinTech economy will enable access to data assembled by another application or monitoring a customer activity that is worth observing.
Exciting times ahead right? Surely, Asia and the Americas are catching up behind Africa and Europe. FinTech as one of the world’s leading and disruptive technology in the arena of banking (excluding banks) & financial services making & writing stories every day. With every new startup firm and attracting sizeable investments through crowdfunding.
IoT, AI, Data Science to boost FinTech
IoT is right in the middle of the buzz around FinTech and establishing its partner. There’s always money in working with money and the FinTech sector is still one of the most exciting areas in tech. With waves of startups disrupting centuries-old financial institutions, embracing mobile technology or utilising the sharing economy and crowdsourcing ideas, innovation in the space is thriving. Financial services were the first industry to support and make-over to encirclement automation and computerisation much before the 90s.
From payments processors to alternative lending firms to automated investment services, FinTech startups have become attractive for a number of reasons. IT systems, mainframes, multi-processes and all kinds of computers and applications being used in the last 3 or 4 decades. But sadly wave of that era got frozen into thick, hard and never-melting iceberg to allow another wave. There was no “second coming” after the initial revolution which is now FinTech is trying to break and revolutionise.
In 2008 FinTech got born in real sense or concept was started and subject matter experts of technology saw an opportunity. This was the same period when global financial crises were on the optimum level and banks were unable to use their deposits or any money on any innovation or any new concept/product to overcome the issues they were facing. From 2008 to 2009 this space was looked and incubated in the test tube and 2009 it came on the table. From 2010 to 2013 the child turned to a teenager with rocket speed and investment went up 4 to 5 folds.
In my last post “Fintech Wave to pass or opening to.. “on January 1st 2016 on FinTech, I did mention, about investments made in this segment from 2014, global investment in financial technology companies tripled from 2013. The trend continued in 2015 when other tens of billion us-dollars were invested in. 2016 looks very promising to follow the same trend. This was because banks were unable to use any money on innovation, as they spent it on new regulations in order to satisfy regulators.
FinTech Intelligence – Blend of AI and FinTech
FinTech companies have come up with innovative blended with Artificial Intelligence, payment intelligence and security intelligence as top-level technologies that give solutions. They have enhanced efficiency in the financial system. On another side, Insurance was a silent follower of FinTech which now planning to explode in 2016.
Other companies in the same path are dealers in stock and trading areas, P2P lending, cryptocurrency payment, cross border money transfer and transfer payments amongst others. FinTech provides a better choice for users which is much more efficient compared to banks and that too on time & place consumer wants in a secured way with greater accessibility.
The technology has given consumers a better banking experience (To experience the same banking services where banks failed) as the system is able to analyse consumer financial behaviour & rating for trending & decision on the fly. The rise in the number of international migrants reflects the increasing importance of cross border money transfer services, which has become an integral part of our economies and societies. FinTech gave rocket speed to same.
Banking and Financial Services software Integration and enterprise architecture blueprints provide better, full view and accurate customer data (Part of Big data) under FinTech domain to bring the best Banking through Technology to create joy and remove the pain of creating large, tedious and bulky Manuel files to the single customer view.
360 Degree visualisation and containers of those such views are now possible for betterment as now we say “digital banking is now a given” not a selective choice any more. Countries like India where transaction volumes are very large, though the values are much smaller. So, in order to have a viable proposition, the solution has to be a very low-cost, much faster then traditional setup/process and that’s the strongest point of FinTech.
Customer Needs Low-Cost Services not Fancy
The low-cost model cannot be managed unless there is enough technology behind it to give it wings for speed and enclosure of safety and security. FinTech took advantages of technology which can manage volumes easily. Keeping speed as close as to eye blink and cost of delivery to the ground was the major achievement for FinTech and given the thrust on inclusive banking, one of the imperatives that delivery got technology-driven.
Importance of digital banking is very high with people in 30 to 40 age bracket generation which is very technology savvy. Allow me to say Banks is data-informed but FinTechs are data-driven. The difference between being data-informed and data-driven is well known and what impact it makes on people life is visible and seen in Africa under mobile money (Financial inclusion).
Banks are on high alerts and many have started coming out of their age-old sleep but with pace which is very very slow or almost negligible. Faster/quick/swift payments is a solution. But what’s the problem? Investor protection against backdrops and fraudster are rapidly on raise with the help of advanced technologies.
The first is that the rise of these non-traditional payments innovators doesn’t necessarily mean the demise of some of the biggest names in payments. Many of them are on the list, too – Plastic Money companies aren’t suffering at the expense of these innovators. Payments are becoming invisible. In fact, it’s quite the contrary. The tracks they’ve laid over the years and the innovations they’ve made to the platforms is what’s give payments life to these new innovators.
One View – AI, ML, Blockchain & FinTech
To put all of them in the picture is not an easy job though. We don’t have any successful model which has all these niche technologies in the photo frame. Lots of banks and FinTech are working to bring this amazing product which is fully functional and working into life.
Banking as a Service – BaaS – This is need of time. This will have the security of blockchain, the intelligence of machines and algorithm and eyes of AI. To draw the rough sketch just to give one view it might look like as below.
The DeepLearning method is helping time-series data processing and prediction for financial markets. These techniques for traditional feature extraction via intelligent trading decisions. are supporting the FinTech system. The used techniques are applied to several technical indicators and expert rules to extract numerical features. Algorithmic trading framework with the use of deep convolutional neural networks is good to start for FinTech.
Points to Note:
All credits if any remains on the original contributor only.
Books + Other readings Referred
- Research through Open Internet – NewsPortals, Economic development report papers and conferences.
- Personal experience of @AILabPage members.
Feedback & Further Question
Do you have any questions about FinTech, Machine Learning, Data Science or Data Analytics? Leave a comment or ask your question via email. Will try my best to answer it.
Conclusion -: FinTech allowed many startups to run within a single product line and in excellent synergise environment. Before, startups usually walled off from each other by putting themselves in silos or in secret rooms. Now you don’t need to spin up secrecy for anything as all of them are working on almost similar idea and innovation. You can run multiple startup ideas in one environment. This means no longer need tens or hundreds of millions of funding. From automated payments processors to lending firms, financial tech companies are poised to snatch away a few trillion dollars from banks by providing better banking services.
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