Part II, How is Fin-tech Disrupting Finance?

Global financing for the fin-tech industry hit a new record in 2018, according to a recent report from CB Insights. The amount of venture capital money pouring into fin-tech climbed to US$39 billion, more than double what it was in 2017.

After the 2008 financial crisis the banking industry needed a face-lift. Even ten years later, many consumers still find it hard to trust conventional and reputed banks….fin-tech companies have filled that void. These young companies have moved into everything from lending to mobile payments to financial advisory. At the same time, consumers have changed their behavior as their attachment to smartphones has grown.

New players can undercut banks significantly forcing traditional providers (banks) to reduce end-user costs and improve services but as a result, there is a lot more competition from service providers. In theory, this should create a more resilient financial system.

However, another outcome of the 2008 financial crisis was the increase of stringent regulations around compliance. This puts enormous cost pressures on both established and new financial institutions. Banks with strong balance sheets can adapt to the new regulations but stand-alone entities or start-ups are typically leaner and have less liquid capital. 

One question being raised in 2019 is whether fin-tech start-ups or BIG TECH will cause the true disruption of the finance industry. Fin-tech start-ups generally have insufficient funding or access to the right the client base whereas, eCommerce giants like Amazon, Alibaba and Apple could materially alter the universe. Tencent, Baidu, Applepay and Samsung are just a few examples of big-tech firms aggressively moving into finance.

In Part III, I will cover the types of roles and the skill sets/qualifications you will need to get a job in fin-tech. For an idea of current openings in fin-tech have a look at our website.

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