EMERGING TECHNOLOGIES | BDO LLP
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VERTICAL TECHNOLOGIES
FINTECH
SCOPE AND DEFINITION Perhaps the perhaps best-known of all the verticals that harness emerging tech, FinTech focuses on the automation and optimisation of processes in banking and financial services. ‘At its core,’ as Investopedia puts it , ‘FinTech is utilised to help companies, business owners and consumers better manage their financial operations, processes, and lives by utilising specialised software and algorithms.’ Apps, processes and products are deployed by FS businesses to automate insurance, trading, banking services and risk management as web- based end-to-end solutions. FinTechs are often divided by observers into two broad categories, the ‘techs’ and the ‘fins’. ‘Fins’ are more b2c-focused, and include peer-to-peer marketplaces and online lenders, historically the beneficiaries of the biggest slice of the funding pie. The FinTech ‘techs’,
meanwhile, focus on the technology that underwrites banking operations, and are more b2b in character. These are the players that are likely to do best in the coming period. One of the key historic areas of FinTech advantage has been in digital payments. FinTech apps and tools have helped make the payments of goods and service quicker, easier and more cost-effective for consumers. The introduction of Open Banking has added a new dimension of opportunity here. PSD2 (Revised Payment Service Directive), which regulates the market for financial technology in the EU, required the big banks to open up to allow smaller nimbler FinTech players to build third-party tools and services around them. (See Case study: Citizen.is. ) Another trend of note is the gradual uptake in blockchain technology, which has the potential to further speed up payment processes, improve trade
accuracy and reduce risk. According to PwC research , over three-quarters of financial organisations – and 90% of payment companies – were planning to integrate block chain into their operations by 2020. FINTECH APPS AND TOOLS HAVE HELPED MAKE THE PAYMENTS OF GOODS AND SERVICE QUICKER, EASIER AND MORE COST-EFFECTIVE FOR CONSUMERS.
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