Major developments in fintech have completely changed the business landscape in recent years. As companies adopt new ways of working, FinTech speed up the way transactions take place, and also how they take place. The birth of Blockchain technology and launch of cryptocurrency in the form of Bitcoin back in 2009 heralded the start of a technological revolution which threatened to shake the very foundations on which the established banking and financial services sector had stood for decades.
Blockchain meant that payments could be de-centralised, with no single entity needed to authorise them. Instead of relying on a central bank, a blockchain transaction occurs via a network of computers that solve a problem in order to complete the payment. A new block is added to the ledger which cannot be altered. Although primarily developed to facilitate trading of Bitcoin, the wider potential for blockchain technology was initially believed to be huge, with large organisations such as Bundesbank, IBM and Nike exploring its potential.
Yet it now seems blockchain technology has failed to live up to its hype. Some say this is because businesses have looked at the new technology available to them and tried to find problems that it could fix, rather than taking a more traditional approach of starting with a problem and developing the technology to fix it.
Research company, Greenwich Associates, says the financial services sector has invested $1.7bn each year in blockchain, yet it has largely failed to ascertain how to apply blockchain usefully on a wider scale. Now it seems the blockchain bubble may have burst, as many become disillusioned with it.
Despite blockchain failing to live up to expectations, the fintech market as a whole is still booming, proving that it’s not all about blockchain. According to Accenture, investment in FinTech tripled in 2014, reaching $12.21bn. Research by Accenture identified three key areas where senior executives in financial services were looking to develop regarding FinTech. These are;
- Openness – liaising with external FinTech providers to identify growth areas and generate new ideas
- Collaboration – with other sectors and industries, to identify new ways of working.
- Investment – in new start-up businesses to generate innovation for their own businesses.
By focusing on these three areas, the more traditional financial service providers can develop their own innovations, and avoid being taken over by other disruptor brands in the market.
Events dedicated to fintech development occur across the globe now, demonstrating the future is indeed fintech, despite blockchain backfiring. The Future of Fintech 2020, taking place in California next June, will bring together around 2,500 industry influencers. It will showcase and celebrate fintech developments on a massive scale, with 50 start-up presentations, over 75 interviews discussing the future for finance and insurance, and an expo connecting sellers with buyers from right across the fintech spectrum.
FinTech have already, and will continue to, completely change the way businesses operate, in terms of how they transact, how they lend, and how they communicate with customers. Regulations such as the new GDPR are also paving the way for start-ups to apply data science and artificial intelligence to improve services for customers, enabling them to provide a more tailored service. Internal processes are also more streamlined, from payroll to pensions, FinTech also make internal processes slicker.