The Youth Vote UK
Financial Technology (FinTech) - the future of financial services
FinTech: What exactly is it?
Fintech has been a hot topic in the press recently, with much discussion focusing on the greater role that it is and will be playing in the future of the economy. But what exactly is Fintech and how can we make sense of the impact that the FinTech sector is having in society, more specifically the business and finance sector, today?
Fintech is a short-hand abbreviation for the term ‘Financial Technology’ – technology that aims to improve the way in which we use financial services by making them more efficient. Ultimately, technology and financial services have been brought together to allow customers to reach these services more quickly.
These financial services can encompass a broad range of online digital activities, from making online money transfers and payments, to depositing a check from your smartphone. Ever since the realisation of the potential that digital technology has to assist in making our daily tasks that much easier to achieve, all the things we previously thought required the assistance of an actual person, like making a trip down to the bank to transfer money can now be done with the tap of a touchscreen. According to EY’s 2017 fintech Adoption Index, 1/3 of consumers utilise at least two or more FinTech services.
Why is there so much discussion surrounding FinTech now?
Well for starters, this innovative bridging of financial and technology services has posed a massive challenge for the more traditional means of providing financial services. Such challenges have been brought to the fore with the arrival of the pandemic and lockdown, which have both exposed and accelerated changes that some say were inevitably going to have to be made in order to reflect changes in consumer habits. For example, banks and other traditional services have begun heavily investing in technology so that they are able to keep up with new competition that has been created by the rise in FinTech services. As more and more fintech services begin to emerge, like mobile banking, online borrowing services and cryptocurrencies, this drives competition away from more traditional ways of dealing with money and transactions as quicker, more efficient ways of doing these things emerge. New retail strategies are therefore being developed by banks like NatWest, who according to the Financial Times are considering implementing new changes like making staff available for longer hours and providing video access to branch bankers, with the possibility for maintaining some for of human contact intended to give it a boost ahead of its competitors.
Why should young people care?
There are a number of reasons that young people should care about the rise of FinTech services. With more exposure to the endless possibilities brought about by FinTech and such a trend leading to a growth in autonomous finance (i.e. finance where individuals now have more freedom to do what they want with their money like investing through mobile apps), this means that there is the need to engage with service providers that make their service offerings understandable so that people can make smart decisions with how what they do with their money while making sure that it remains secure.
In terms of the changes that not only FinTech, but the tech industry as a whole has prompted with regards to the structure and organisation of society, it is also important to be aware of these changes and keep an eye on the trends and patterns that are emerging both in the technology and financial sector, as these are likely to have a strong impact on our future. For example, the rapid surge in tech dependency over the past year in allowing for those of us who have been able to ‘work from home’ has highlighted the importance of digital skills in being able to navigate such a shift in the way we do things.
With the use of tech and digitalisation likely to increase even more, this presents vast opportunities for young innovators and entrepreneurs to develop and share their digital skills and talents.
Tatiana Kasujja - Campus Ambassador, University of Cambridge