The Fintech Boom: Technology brings obsolete financial systems up to date
The merging of financial services and technology birthed the fintech industry, one of the fastest growing markets over the recent years, which is not only improving financial services but also spurring economic growth and development in many parts of the world.
We haven’t even reached the end of 2018, and this is already a record year for global Fintech investment. Just in the first half of 2018, the global fintech sector accumulated $41.7billion — up from $39.4bn in 2017.
The introduction of technology into the once obsolete financial system meant that service providers are now taking heed of customers’ needs. This has created systems which are faster, cheaper and more convenient, and understandably, has made customers turn their heads away from the old institutions which had once dominated financial services.
Banks and well-established financial services providers are now turning to tech developers looking for ways to innovate and improve their products and services. In North America alone, it is reported that banks spent nearly $20billion on new technologies in 2017.
Fintech is indeed one arm within the Fourth Industrial Revolution, whose core aim is to deploy innovative technologies to empower individuals over their own finances and information.
The expanding pace of the fintech market shows that customers adopt fintech systems quickly. Research from PwC revealed that customers are increasingly more open to non-conventional ways of managing finance, with 30% of consumers planning to increase their usage of non-traditional financial services providers. The growing demand has also led venture capitalists to invest substantially in fintech projects, with investment in fintech companies up 41% over the last four years according to PwC’s data.
Fintech and Development: The case of Africa
The disruptive power of fintech applications is even stronger when applied to address the needs of the populations in developing economies. A very evident example is seen in African countries, where vast adoption technology has spurred the movement of leapfrogging, accelerating economic and GDP growth.
Africa has been at the forefront of fintech over the past few years, with an impressive number of startups using technology to address the most fundamental problems across the continent.
Mobile banking is said to be of one of the most successful and impressive cases of the evolution of Fintech; this is especially true in the case of Africa. Because of the incredibly high rates of financial exclusion in Africa, mobile money came to fill in this gap, providing affordable alternatives for managing and transferring money to millions of Africans who had never before had access to banking services.
The contribution of the fintech industry to sub-Saharan Africa’s economic output will increase by at least US$40-billion to $150-billion by 2022, according to Financial Sector Deepening Africa, a development finance organisation.
The fintech sector is currently employing about 3 million people in Africa, of which mobile companies account for a great part. “If you look at the value chain, most of that money is coming out of mobile phone companies,” says Evans Osano, director at FSD Africa Financial Markets.
“So from the other support services the contribution is not much, but is expected to increase as fintech develops to address the financial needs of people or making services more accessible.”
Switzerland: The European hub for Fintech firms
In the developed world, we see that Switzerland is shaping up to become one of the fintech hubs.
“In Switzerland you’ll find long-term vision. Switzerland has the most decentralised political system in the world and its citizens are in full control of the system. This guarantees extreme stability on the one hand, and on the other hand competition among the cantons and its municipalities. This results in very friendly and flexible social and business rules, low taxation and high service delivery,” says Swiss entrepreneur and fintech expert Marc P. Bernegger.
“While Switzerland has not been a well-known global hub for start-ups, I think we can now see some very positive changes such as political and public discussions around incentives for startups, the launch of incubators and accelerators, and not least a change in perception of what it means to be an entrepreneur. “
In fact, Switzerland has shown itself to be open-minded and friendly to new technologies. The country is home of one of the hottest spots for crypto and blockchain matters in Europe, the Crypto Valley, in Zug.
The presence of the Crypto Valley combined with the country’s tax-free policy for crypto investors has given Switzerland the reputation as the number one most blockchain-friendly country in Europe.
Fintech+ is a new Fintech initiative in Switzerland, where big fintech names come together to realise their mission of transforming Switzerland into a global hub for tech innovation.
The 2018 edition will focus on the disruptive nature of AI in fintech and sustainable finance. You can see the agenda and speakers here. For more information, get in touch with us at email@example.com
Our Director Stefania Barbaglio will be discussing with John Hucker, President of Swiss Finance + Technology Association (SFTA)the importance and role of Fintech in next week Financial Fox TV show
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