What is Fintech – A Revolution That Threatens The Global Banking System?
1. What exactly is fintech?
The acronym for financial technology, fintech is used for all companies that use the internet, mobile phones, cloud computing technology and open source software and aim to improve the efficiency of banking and investment activities.
Fintech companies are divided into 2 groups. The first group is companies that serve consumers, providing digital tools to improve how individuals borrow, manage money, finance startups. The other group is “back-office” companies that support technology for financial institutions.
2. Why is fintech a hot word?
Fintech is able to reshape the financial industry, impacting the most important components of the industry. Currently, P2P lenders (directly connecting borrowers with Internet lenders) have been operating effectively, helping to shorten the approval time of loans from traditional banks to weeks.
According to Morgan Stanley, the amount of online loans in the US will reach $ 120 billion by the end of this decade, compared with a modest figure of $ 20 billion in 2015.
In the capital market, startups and even big guys like Goldman Sachs or even the Central Bank, you are trying to use virtual currencies (like bitcoin) to replace traditional money and asset transfers.
3. Who manages fintech?
In general, financial regulators around the world welcome the fintech wave because it promises to make financial transactions easier, more transparent and lower cost. US Federal Reserve Chairman Janet Yellen said that virtual money technology will help upgrade an old international payment system.
4. Risks from fintech?
Although fintech companies offer a wide range of financial services (from online mortgage loans to all types of retirement accounts), convenience can make some customers participate in services. they do not really understand their obligations.
Some people fear Fintech can also replace traditional physical banks, making low-income households unable to access banking services.
Shares of several US fintech companies rose sharply but then plunged. In May 2016, LendingClub, a San Francisco-based P2P company, fired CEO Renaud Laplanche after a scandal. As a result, its shares halved in just five trading days.
5. What did managers do?
They are taking the first steps to find ways to protect consumers and the financial system without slowing the process of innovation.British officials have implemented a program to work with startups at an early stage to ensure they comply with the law.
However, some fintech companies are trying to limit laws and set up lobbying groups to expand their influence in Washington.
6. Are investors betting on fintech?
Worldwide, venture capital companies have poured more than $ 17 billion into fintech startups in 2016, up 6 times from 2012.
In Singapore alone, there are more than 100 startups operating in the field of fintech. There has been only a small part on the floor, so investors expect a wave of M&A and go to the floor in the coming time as banks hunt down the technologies they can use and at the same time. startup companies will achieve maturity.
7. Do big banks worry about the wave of fintech?
Yes. After belittling these startups in the early stages, banks now accept the fact that technology will have a strong impact, making the banking sector fundamentally change like many other industries.
However, while consulting robots and other technologies can help banks serve customers better, thousands of employees can be replaced by machines. Banks, securities brokers and other traditional entities are also afraid that because we are just starting to build.Tags: Fintech, P2P, startup