04 Oct FinTech and What’s New
What Is Fintech?
Fintech is when technology is used in the financial services to produce disruptive business models and inclusive goods. For example, in Kenya M-Pesa provides a mobile-phone based payments network that serves millions of “unbanked” Kenyan
Fintech In The News
Q4 of 2014 has been the most active in Fintech’s history and the industry is beginning to have the dotcom boom feeling of the 1990s. Financial technology startups raised over £461.3m from investors between 2008 and 2013.
As a result of the financial crisis, financial companies cut R&D. With new banking regulations and the need to eliminate costs from financial services crated the opportunity. There were also a large talent pool of unemployed financial services workers and they had ideas about how to improve banking and were eager to directly compete with the big financial companies. The UK also had a favorable policy environment for startups.
Will Fintech Make Conventional Consumer Banking Unnecessary?
As with any innovation, there will be winners and losers and this will be the case for Fintech. Some banks will thrive other will find it difficult to keep up. Big banks might try to acquire Fintech innovators and form a partnership which could result in new products and services. Fintechs seem to be working well with existing infrastructure and actually complementing it.
How Does Fintech Help Socially?
Here are a few examples. Tackling financial exclusion, like in Bangladesh where less than 15% are connected to the formal banking sector, bKash let Bangladeshi’s send and receive funds safely with mobile phones. Companies like Azimo and Transferwise are eliminating the high fees usually associated with sending money overseas. Crowdfunding and microfinance platforms that give individual entrepreneurs and small businesses access to capital that they would not get from a regular bank.
What Can We Learn From Mobile Banking Companies In Africa?
Mobile banking in Africa has been a revelation in what the possibilities can be with a bit of imagination. The convenience of sending money with a single text was abundantly clear. Before M-Pesa people would have to travel 24 hrs by bus to give money to family members in rural Kenya. The service was launched by a mobile operator not a bank and they have access to over 10,000 “branches”.
Is Social Media Catching on?
Yes they are. WeChat is a money gifting app that sends a digital version of ‘cash in the red envelope’. When integrated with social media, it will become a new model of finance.