The future of FinTech: How tech will transform financial services

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Established banks and financial players are quickening the pace of innovation in the FinTech space, according to Luca Raffellini, director of business and financial services at Frost & Sullivan.

Speaking at the Global Community of Growth, Innovation and Leadership (GIL Europe) conference, held in London today, Raffellini discussed the current state of the UK’s FinTech scene and its future evolution.

During his keynote speech, titled ‘The Future of FinTech’, the director attempted to dispel the idea that the term only covered venture capital-backed startups.

Defining FinTech: Lifting the lid on financial tech
Startups, he said, are part of the FinTech environment. “When we talk about FinTech we are also referring to financial technology [in more general terms],” he added.

“The large incumbents are not standing still, there is an impetus for them to react,” said Raffanelli, adding that a lot of capabilities in banking were being poured into artificial intelligence and bitcoin’s underlying technology, blockchain.

Unbundling, rebundling

Raffanelli’s keynote address was followed by a presentation from Huy Nguyen Trieu, the author of ‘Disruptive Finance’ and a former banker and entrepreneur.

Nguyen Trieu spoke about the unbundling of finance, noting how startups were working with technology to do many different things, and how being able to unbundle and rebundle was challenging for both small and large firms.

“But it’s not impossible,” he said. “How do we know this? We had Amazon unbundling (selling books) and then rebundling (now selling groceries).”

Now, in the second wave of innovation, he said, we are seeing companies such as Uber making the act of paying completely disappear. “The payment is integrated into the transaction,” said Nguyen Trieu.

The white space

Diversification is also playing a significant role in the ways that companies, both large and small, are behaving today.

For example, you can go on Amazon and choose to either pay up-front for a MacBook or pay in monthly instalments, he said.

“There’s no need to ask a bank for a loan,” added the author.

With this in mind, Nguyen Trieu encouraged attendees at the conference to watch the ‘white space’ or sectors that are underserved by traditional players.

Kenya – and not the UK or the US – has one of the most successful mobile payments systems in the world, added Nguyen Trieu.

Regulation is key

Nguyen Trieu also participated in a panel discussion alongside Amit Pau, managing director and venture partner at Ariadne Capital; David Slater, director of international trade and investment at London & Partners; and Keith Fingleton, chief technology advisor – financial services at IDA Ireland.

The panel discussion, moderated by Raffellini, also set out to look at the future of the UK’s FinTech industry.

“Five years ago, a lot of FinTech companies wanted to operate outside of regulation,” said Nguyen Trieu. “I don’t think any entrants into the sector today have that mindset.”

People today, he noted, are much more professional in that sense.

Slater agreed, adding that the sooner firms could get to grips with bureaucracy, the sooner they could be expected to enter the market.

The FinTech capital

Nguyen Trieu noted that when he first arrived in London 15 years ago, the UK’s capital city was not necessarily the best place to found a startup.

“London may have become the FinTech capital [of the world], but let’s not take that for granted. There are other places in the world where there are huge opportunities, such as Asia and Africa,” he said.

With Brexit heavily on everyone’s minds, Slater touched upon the need to continue working with talent from overseas.

“We will kill ourselves if we are not open to the world’s best talent,” he added.

The next decade

So, what will FinTech look like in a decade’s time?

Nguyen Trieu said he believed the sector would be totally different to what it is now.

This, however, does not mean that banks would cease to exist. Nguyen Trieu believes FinTech would operate similarly to the the way the advertising sector does today, where traditional advertising agencies are now competing with the likes of Google.

Fingleton agreed, adding that the next ten years would represent “an interesting journey” for the financial technology sector.

“Financial services needs to catch up with the changing business model,” he concluded.

Source :http://techcitynews.com/2016/06/30/the-future-of-fintech/

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