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This is the final part of our series on Fintech. In the first two we have looked at what Fintech is and at a few big players, such as Orchard. In this article we will analyse what Fintech can mean for investors.
First of all, digital technology will alter not only the financial services industry but a wide range of ‘traditional’ professions, including law, medicine and teaching. These industries form the pillars of our society. For example, law firms that do not offer digital platforms for clients to choose services and compare pricing structures will struggle to compete with the customers born from the new generation of tech-savvy individuals. Also, teaching is no longer limited by physical barriers: websites such as Coursera make it possible for anyone that wants to put in the time and effort to learn virtually anything from data mining and AI programming to finance, economics and civil engineering. Therefore, the question of what Fintech might mean for investors can be answered clearly and simply: change.
The way you think about the business world will alter a lot – financial institutions will no longer be dominated by banks and the asset managers will continue to employ complex algorithms in their financial engineering processes. In the future we will see more people engaging in financial transactions via peer-to-peer platforms. Some analysts suggest that even the way companies raise funds can alter fundamentally with the raise of platforms such as Seedrs, an online platform that raises money for start-ups.
The digital technology will also alter the way people interact: Facebook and LinkedIn are only the beginning: encrypting messages, high-frequency trading algorithms and crowdsourcing are growing and affecting all aspects of business life from recruitment to accountancy.
I suggest you pay close attention to developments in the technological sector and not just to the new iPhone models but to new programing languages, algorithms and research papers that can provide you with insights into the future.
