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Fintech is the buzzword of the new millennium. Described as the tech industry’s next big frontier, fintech is a portmanteau word that combines finance and technology. Essentially, it is a relatively new and often a nebulous term that describes emerging technology. Fintech helps financial institutions deliver financial services in newer and faster ways, which gives a competitive edge to companies employing fintech. The fintech sector is at the intersection of the financial services and technology sectors where technology-focused start-ups and new market entrants are innovating products and services traditionally provided by the financial services industry. The technologies of this new revolution have disrupted and triggered a seismic shift in the financial system, the implications of which will extend far beyond the fintech companies that pioneered their use in financial services. Value chains that have characterized the industry for decades are being disrupted and reshaped with implications for customers, regulators, incumbents and every other stakeholder in the financial system.
Fintech touches the entire spectrum of financial services industry
A new magical combination of geeks and venture capitalists has now trained its sights on the financial services industry that was already suffering a credibility crisis in the wake of the global financial crisis. This new combination has challenged the status quo and is on the cusp of changing the financial world completely through products, processes and platforms. Fintech touches the entire spectrum of financial services: consumer, investment, commercial and SME banking, wealth management, property and insurance, and market operators and exchanges. Some of the areas of that are experiencing the wave of change are payments, remittances, blockchain, and artificial intelligence. In-memory computing platforms are helping financial services firms leverage sophisticated payment systems, while the Internet of Things and blockchain are revolutionizing asset and wealth management, and helping spread betting platforms to thrive, enabling fintech providers to offer a wider range of real-time services.
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Spread betting platforms are a prime example of where fintech has revolutionized the scenario. Some of the benefits of spread betting include low entry and transaction costs, preferential tax treatment, and a virtually unlimited array of products and options. However, spread betting is also highly volatile and minimally regulated, which results in significant risks. To limit these risks, spread betting platform providers use advanced mathematical models to analyse vast amounts of data from subscription services and current news, predict outcomes of events, and help devise optimal strategies, including hedging bets. These strategies require analysis of real-time data to factor in market conditions that are changing by the second. Fintech achieves this through big data, complex event processing or streaming analytics, robots, online and cloud platforms, data partitioning, parallel processing clusters, mobile trading and more. The use of these technologies to deliver a successful spread betting platform calls for powerful processing performance and is perhaps symbolic of the variegated splendor that fintech has on offer.
The new emerging financial world
Digital transformation is revolutionising every aspect of the financial services industry and the pace of change is breathtaking. Banks are rapidly adopting cloud-based applications and are outsourcing some of their data processing and analysis to fintech companies that can do it faster and better while satisfying specific regulatory requirements. Banks also use fintech to meet consumer demands for 24/7 availability, digital banking, payment through social media connections, biometrics, and contactless spending. Financial institutions too have turned to fintech to automate algorithmic and data-driven investments and trade. Lenders are looking to fintech to help implement new strategies such as peer-to-peer lending and crowdfunding. Insurance companies have turned to fintech to leverage technologies. Even the investment banking and capital market space is being just as radically changed by fintech. The range is growing and the speed is mindboggling.