What the term does tell you is little beyond being the intersection or a big bucket of finance and technology. But more importantly, due to the static nature of wordplay, it fails to enlighten on the dynamic impact it has had and will certainly continue to have on the contemporary global economy, not just technology or financial services. This implies that the definition of Fintech is one that is dynamic; this I based not on some ideological understanding of the Fintech space but on my experience. On a daily basis, Crowd Valley engages in conversations with clients from a range of different industries, demographics and backgrounds, a number of them unrelated to the conventional financial services space and they all echo a few common themes which can be woven together to define Fintech as one of the following:
- systems that boost efficiency, accessibility and profitability;
- the ecosystem that has facilitated the alignment of public and private gain (renewable energy, healthtech, insurtech);
- technology that democratizes the investment space and creates new investment channels and new classes of global investors and entrepreneurs.
According to Chris Skinner, Fintech extends to Regtech for Regulatory Technologies; Wealthtech for Wealth Management Technologies; Insurtech for Insurance Technologies; and so on. On top of that, Fintech has gained subcategories like Lending, Analytics, Digital Identity, Cybersecurity, SME and Student Financing, Payments, Robo-advice, Blockchain Distributed Ledgers, Neobanking, and more. Then there are also some generic technologies around Cloud, the Internet of Things, Artificial Intelligence, Machine Learning, Biometrics and others that are also creating Fintech themes and impacts. These can also be surmised into 3 streams:
- creating new financial infrastructure;
- removing friction from financial markets;
- reducing costs & overcoming inefficiencies.
But Fintech goes beyond just banking and the diversified financial services space. It’s a means to change the way any business works and the way a business or a person may interact, exchange information and transact with each other. In a true democratization of the investment space, it allows millions of normal people from across the world to inject capital into ideas and businesses they want to support, whether this may be in a useful technology or household accessory or in renewable energy infrastructure that allows them personally have a stake in investing in their planet’s future and, more importantly, actually feel like they have a voice in these previously esoteric channels and investment avenues.
In this manner, normal people allow these untested ideas to enter a more mainstream space through what is essentially a crowd-sourced evaluation and analysis that leverages the experiences, perspectives, educations and backgrounds of thousands and even millions of people across the globe. Interestingly, Estimize utilizes this aggregated crowd based analysis in their market predictions and crowdsources earnings and economic estimates from 44,022 hedge fund, brokerage, independent and amateur analysts. And Estimize claims to beat Wall Street estimates more than 70% of the time, but the majority of investors continue to take cues from the relatively small pool of analysts. Oculus is another example of a relatively novel implementation of virtual reality software that raised $2,437,429 in 30 days, went on to raise additional investment capital and was acquired by Facebook.
Furthermore, there is significant potential for business synergy in working with seemingly unrelated business segments. For example, in the UK, there is an app called Sweat Coin that pays you in crypto-currency based on the number of steps you take, highlighting a combination of fitness and currency in a new model that turns the conventional gym model of paying for fitness or exercise upside down.
APIs are facilitating this synergy at a breathtaking pace and allow a number of functions or processes to be integrated into single interfaces. With API’s your business’ digital interface could be empowered to provide the latest data on the website. Pulling in financial statistics, currency from XE and a news feed from a range of sources, your platform would meet client needs and answers without them leaving the site. APIs form the basis of Crowd Valley’s framework allowing the creation of comprehensive digital finance platforms incorporating intuitive processes to support any financial service and transaction and integrate with API based service providers to provide complementary services such as investor accreditation, data aggregation, fund/payment transfer, KYC/AML systems, CRMs or clearing house functions, to name a few. That’s the beauty of API based infrastructure - its flexibility in fostering both internal and customer-facing innovation and efficiency for the long term. A study by McKinsey Global Institute estimates that companies increase their productivity in 20-25% by undertaking a API strategy, thanks to the shared knowledge used in the analysis of the business’ operations.
At outset, the point being made is that Fintech is not, by any stretch of imagination, only about the ‘fin’ or the ‘tech’, it’s a means to build and grow your business or invest in your personal future by engaging in the wave of digital transformation across most, if not all, industries.
If this piece struck a chord with you, feel free to get in touch with us at Crowd Valley. We’d be happy to have a discussion about how our API framework and Cloud Back Office could help you.
Adit Vaddi is a business development associate with a Bachelor of Arts in Economics from Vassar College, New York. He has a background in Economics, Accounting, Political Science and Operations (Event Management). He is from Hyderabad, India. Prior to Crowd Valley, Adit has worked as a research analyst for Baring's Private Equity Partners in Mumbai and for the IdeaSpace Foundation in Manila as well as a risk analyst for Fincare in Bangalore. On the operations side, Adit has organized and run over 30 large scale events that cater primarily to a college community. He is currently based in New York City.