An Opinion by Maryville University.

Technology has impacted virtually every industry, particularly the financial sector. Whether it’s the development of new forms of currency or expanding how and where investors can trade, the financial industry is evolving at an unprecedented rate. Mobile apps, online lending platforms, and smaller, more agile organizations are successfully competing with large, established firms.

Fintech Landscape

The term fintech is defined as technological innovation in the financial sector, including innovations in financial literacy and education, retail banking, investment, and cryptocurrencies.

The Fintech Sector Landscape

Fintech manifests itself in the banking sector through tech-driven innovations like virtual banking, mobile banking, and other banking platforms. Examples of banking sector fintech in action include Seed, Simple, and LendStar.

The payment sector uses fintech to propel several modern conveniences, including virtual wallets, online payments, and mobile payments. Fintech is found in the investment sectors through avenues pertaining to personal finance and investment platforms. Looking at the financing sector, one can see fintech behind concepts like P2P lending and crowdfunding. The insurance sector incorporates fintech through online insurance infrastructure, insurance comparison, and health insurance. Finally, infrastructure and the enabling tech sector utilize fintech through cryptocurrency, biometric security, authentication, and data research.

Impact of Technology on the Financial Services Industry

Fintech’s core concepts are increasingly influencing the way the industry conducts business. For instance, 82% of American financial services business are concerned about losing revenue from fintech – a percentage that’s up from 69% in 2016. At the same time, 88% of all institutions expect to increase fintech partnerships within the next three to five years. Furthermore, 61% of institutions are also currently focusing their strategies on disruption.

Fintech’s Impact on Financial Sectors

Asset and Wealth Management (AWM)

Fintech is substantially altering the way people strive to achieve their long-term financial goals. 41% of AWM pros believe their clientele is already doing business with fintech companies. These pros also have a bead on where this change is coming from, as 60% feel consumer wealth management activities are the ones deemed most likely to move to a fintech company. As a result, AWMs are focusing on integrated solutions to improve efficiency and data analytics.

Banking

Most bankers feel fintech has the power to make game-changing waves in their industry. 80% of banking pros believe that consumer banking will continue to be the focus of industry disruption over the next five years, and 63% see fintech’s ascension as an opportunity to expand products and services. Along the way, they acknowledge customer empowerment technologies, intuitive product design, and round-the-clock accessibility attractive traits that move this potential paradigm shift. They anticipate personal loans and personal finance to be the products and services most affected by fintech.

Insurance

52% of insurers see the insurance industry as the second-most likely sector for disruption. The industry itself has taken a proactive approach to this change, as 84% of insurers will increase fintech partnerships over the next three to five years. The consensus in the industry is that they’ll focus on targeted customer engagement tech.

Transaction and Payments Services

73% of payment companies are worried that part of their business is at risk to innovators. While the percentage may look high, it’s decreased from 87% in 2017. In fact, the industry is embracing the concept, with 90% of companies planning to adopt blockchain tech by 2020.

User Adoption of Fintech

According to Ernst & Young’s FinTech Adoption Index, 33% of consumers are digitally active and use fintech services.  Half of these consumers use fintech to handle money transfers and payments. The most active services used for fintech are insurance, financial planning, and borrowing.

New Careers and Opportunities

There’s a growing number of fintech startups, which are collectively receiving a growing amount of supportive funding. 1,498 fintech companies have been founded within the banking and capital markets industries since 2008. 974 fintech-driven real estate companies and 905 fintech-driven insurance companies have also launched in that same timeframe.

However, there’s a lack of expertise in this growing industry. For instance, 94% of financial service pros suspect their colleagues are using buzzwords like “blockchain” and “artificial intelligence” without fully grasping their meaning. 66% also believe that a lack of training is the biggest obstacle blocking the development of expertise.

Yet this hasn’t derailed opportunities for qualified applicants. Job postings mentioning “blockchain”, “bitcoin,” or “cryptocurrency” have increased 621% since November 2015 on Indeed.com. Additionally, there’s been a 1,065% growth in searches for jobs mentioning these terms. In fact, there are even specific job search sites devoted to such terms, such as CryptocurrencyJobs.com.

There are several popular fintech jobs emerging on the market. App developers, for instance, create and maintain new programs and software for devices. AI experts implement AI tech in the financial industry, most often in research and report generation and customer support. Quantitative Analysts, or “quants,” develop complex financial models and algorithms used to price, trade, and analyze risk. Finally, blockchain and cryptocurrency experts analyze trends to help traders and fund managers make informed decisions with the blockchain and cryptocurrency world.

How the emerging concept of fintech is changing the way financial matters are handled.

Maryville University