With the rise and advancement of technology and artificial intelligence, there is no question that new rationalists are joining this group to enforce their ideas. However, most Rationalists and highly successful people do not hold back anything, and maybe this is because the technological and financial industry embraces disruptors of the norm. One rationalist concept adopted by the technology and financial sector is Fintech.
The Fintech Rationale
Fintech today refers to a variety of financial activities that can be performed without the assistance of a person, such as money transfers, using a smartphone to deposit your check, finding a way around going into a bank office for a credit application, receiving a loan for a business startup, or managing your financial investments.
Landscape of Fintech
According to CB Insights, there are 26 FinTech global companies valued at $83.8 billion. New and emerging fintech businesses in 2016 received $17.4 billion in loans in the year 2016 and by the latter part of 2017 were on track to exceed that figure. CB Insights also indicated that 39 more Fintech companies were valued at $147.37 billion by the last part of 2018. Most new FinTech businesses were created in North America, followed by Asia. Global FinTech financial backing reached a new high in the first part of 2018, thanks to a significant increase in North American deals. In Europe, funding activity fell low in the first segment of 2018 but then rebounded.
Traditional to Modern Concepts
The way we perform financial transactions and use financial services is changing dramatically thanks to Fintech. Notoriously volatile cryptocurrencies are quickly becoming a common trading asset. Companies generate capital instead of issuing securities using digital tokens, and machines advise humans on some of their most significant financial decisions. Fintech, on the other hand, is slowly but steadily changing the way we think about money. The Fintech phenomenon, which is becoming increasingly common, is progressively reframing our knowledge of the financial system in supposedly objective, science-based terms as another arena of targeted application of information technologies and computer analytics.
Traditional means of offering financial services and executing financial transactions are clearly “disrupted” by Fintech. It is also affecting the way we think about finance and imagine its future trajectory, although invisibly. Fintech’s emergence is slowly recasting our standard view of the financial system in seemingly objective (science-driven and normatively neutral) terms, just another sector of deploying new information technology and computation. One-third of customers use at least two or more fintech services, according to EY’s 2017 Fintech Adoption Index, and these consumers are becoming more conscious of Fintech as a part of their daily life.
The Simplicity
The simplicity of this emerging financial story is attractive. It concentrates on the transactional aspects of finance rather than the intrinsically complicated systemic dynamics of the industry. Fintech embodies a micro concept rather than a macro-level view of the financial system, focusing on solutions for identified and isolated frictions in financial market activities. Rather than complex normative judgments and policy compromises, it works with clearly functionally defined, programmed (and so controllable) business processes and tools. In its broader aspirations to rebuild financial markets on principles of mutability, the fintech narrative has unmistakable undertones of a social revolution.
Users of Fintech
Fintech users fall into four broad categories: 1) B2B for banks and 2) their business clients, 3) B2C for small businesses, and 4) consumers. Trends toward mobile banking, increased information, data, and more accurate analytics, as well as decentralization of access, will allow all four groups to interact in previously unheard-of ways.
In terms of consumers, as with most technology, the younger you are, the more likely you are to be aware of and accurately describe Fintech. Given the massive size and rising earning (and inheritance) potential of that much-discussed segment, consumer-oriented Fintech is primarily aimed at millennials. Some fintech observers believe that the emphasis on millennials is due to the size of that market rather than the ability and interest of Gen Xers and Baby Boomers in using Fintech. Fintech, on the other hand, tends to offer little to older consumers because it fails to address their issues.
Conclusion
In this way, it implicitly promises to change how we interact with one another and who we are as a community. Where old politics failed, new technologies will succeed. So what are our thoughts on this developing story? Does Fintech represent a genuine change in the underlying mechanics of finance? And, if so, what is the nature of this fintech revolution, and what are its potential consequences? Is it capable of providing the ultimate—politically uncontestable and normatively neutral—cure for the financial system’s core dysfunctions? As it continues to play out, the consumer will answer those questions on a personal and transactional level.
