Fintech, short for financial technology, has pervaded every aspect of our lives. This union between finance and technology has heavily altered the way banking and finance are being done, revolutionising the way we manage our transactions and assets. What is impressive is that this revolution has become woven so seamlessly into our lives that it feels like just another part of our everyday happenings. However, when we think about it, these daily happenings are greatly influenced by Fintech. Whether it be online banking, sending money digitally to a friend, or even paying for products using our smartphones, Fintech has been steadily making these transactions more convenient. How exactly did Fintech manage to infiltrate so deeply into our lives, and why will it continue to do so? Let us dive in.
A big reason why Fintech has managed to permeate so widely is due to the rapid growth of the industry. All over the world, innovators are working round the clock to remodel our financial services. With his 20 years of experience in Fintech innovation, Rich Turin shares with us on our podcast Wealthtech Unwrapped about the growth of Fintech. He notes that Fintech is a hugely competitive industry in China, similar to how investment banking was like in the West. The lucrative nature of Fintech attracts many young people who are willing to sacrifice to earn more, fueling rapid innovation within the industry. With innovation comes new services and products that continue to simplify our lives. This leads us to our next point, which is that Fintech is global in its reach.
In a world without borders, the rapid growth of Fintech in any part of the world will have global ramifications. Rather than influencing their local geographies, Fintech advancements will impact the entire ecosystem surrounding banking and finance. Looking at the new asset class of cryptocurrency, we can exchange our local currency for a more stable digital coin that will generate yield over time. Because cryptocurrency exists in a decentralised space, anyone from anywhere in the world can invest in it. In an interview with Edmund Lowell, founder and CEO of KYC-Chain, he shared that this was especially useful for residents of countries with a collapsing local currency as they will take refuge and protect their savings using cryptocurrency. Since anyone can participate, Fintech as an industry is without borders and can influence almost every corner of the globe.
Finally, Fintech has only been able to become so ubiquitous due to the advances in technology. Historically, the reality has been that financial planning is for those who can afford it. However, advancements in technology have helped lower the cost of financial planning, allowing many more to access this service. One way has been through Robo-advisors. These Robo-advisors are a marriage between human advice and technology, using algorithms to provide automated investment guidance to anyone who uses it. They not only make financial advice accessible but straightforward as well. According to Statista, in 2020, the US had almost $1.05 Billion worth of assets under management in the Robo-advisor segment. Once the deployment of Robo-advisors has become widespread, financial planning will no longer be the prerogative of the affluent.
According to Bambu’s Consumer Sentiment Analysis, tech-savvy investors are seeking information and investment options to provide more context. Robo-advisors, because they lower the barrier to entry for financial advice, are well-positioned to meet the needs and demands of these end consumers. Furthermore, decreasing advisor fees using technology is especially crucial during economic downturns. As people’s finances become tighter, they will be less willing to pay a high premium for financial advice. With these benefits above implementing Robo-advisors, many large financial institutions and firms are quick on the uptake. For instance, Deloitte forecasts that by 2025, over $16 Trillion worth of assets will be managed by Robo-advisors. As members of the Fintech community, Bambu aims further to advance the deployment of Robo-advisors among various financial institutions. We help our clients navigate their key considerations to implement digital solutions that value-add to their business, helping them create the best digital wealth experience for their customers.
There is no foreseeable ceiling to the heights that Fintech can reach. As the industry grows and technology progresses, the union between finance and technology will continue to be strengthened. Aki Ranin, the Co-founder of Bambu, shares that Fintech will become so integrated into our lives that managing our finances will become increasingly unconscious for users. He believes that technology will take care of our bills one day, optimise our spending, and help us invest for retirement, all behind the curtains. All in all, Fintech will become increasingly intertwined with our everyday lives.