Have you ever checked your bank account on your phone? Or used your phone to make a purchase? This is called financial technology (FinTech), and it is one of the most revolutionary tools out there. While FinTech began primarily as highly advanced data analysis tools for investment banking and other institutional investing, it has expanded. Now, over half (64%) of global consumers use FinTech including mobile wallets like Apple Wallet, crowdfunding sites such as GoFundMe, and online banking apps (EY 2019). This influx in FinTech usage in recent years is also changing consumer habits and encouraging increased spending. Similar to using a credit card as opposed to cash, using mobile wallets lessen the “pain of paying” and require less thought than a normal cash purchase (Pinsker).
On the other hand, when “banks [use] FinTech, they collect data to create new cost-effective ways for money management,” says Jessica Cardiel, a TCF Bank Branch Manager. With rapid technological advancements in recent years, a striking 81% of banking CEOs are highly concerned about the speed of technological change -- more than any other industry sector (PwC 2015). That is because FinTech has introduced ever-evolving problems: increased fraud, transaction activity disputes, and network issues; this leaves banks and regulators at the mercy of the technology.
Despite this, FinTech capabilities allow anyone to use it, whether they work in the financial industry or are a consumer. In the case of consumers, investors are quickly transitioning to the new wave of online investing. Free trading with apps like Robinhood have revolutionized the once time-consuming investment process that previously cost up to $10 per trade. Arthur Olunwa, a frequent user of online banking/investing apps and former Senior Portfolio Manager at Exelon, finds that FinTech’s “greatest benefit is convenience.” Investing has become more simplified for the average retail investor, saving them both time and money.
As FinTech continues to grow exponentially, it is affecting consumers and businesses alike. In the future, FinTech will continue expanding to new frontiers.
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