Financial technology, or fintech, has been a success story for the ages in the last few years. Considerable leaps in technological capability have enabled new financial products – both B2C and B2B – to disrupt the market, resulting in a bumper year for fintech investors in 2021.
Though there have been bumps in the road towards the end of 2022, 2023 nonetheless promises to be another strong year for the yet-emerging industry. But how exactly did we get here, and how can you best engage with fintech for the betterment of your business or finances? Further to this, what might the new year hold exactly for the industry?
The Rise and Rise of Fintech
Fintech is by no means a ‘new’ industry, even though its influence has grown considerably in the past decade. Fintech initially described a small number of businesses utilising technology in the early days of digital computation to provide back-end services to large corporations and banking institutions. Fintech has been central to the roll-out of technologies we take for granted today, from the ATM to the chip and PIN debit card.
But the tech revolution at the turn of the 21st century created new opportunities for start-up businesses, who were first to adopt new methodologies over existing financial institutions. For consumers, this is most evident in the explosion of digital banking apps and technologies, and the rise of competitive online-only banks disrupting brick-and-mortar lenders.
Fintech is also at the bleeding edge of new technological advancement, as start-ups increasingly engage with the possibilities afforded by blockchain – the foundational technology behind digital currencies such as Bitcoin and Ethereum. New platforms for engaging with cryptocurrency, and new back-end systems for managing cryptocurrency, are big-ticket ventures with huge potential.
Engaging with Fintech
There are many ways you as an individual can engage with new fintech businesses and tools. As an operator of a business, you might start to fold cryptocurrency capabilities into your infrastructure – maximising earning potential and joining the vanguard for disruptive change in the process. Doing so requires engagement with new legal principles, though, especially where international node-based transactions are concerns; a fintech law firm is a helpful ancillary investment to ensure proper and robust uptake of such technologies.
As a high-wealth individual, you might interact with fintech products like retail trading apps to directly control your investments. Alternatively, you might even take the opportunity to invest in fintech on a meta level, riding the fresh wave of growth to a new digital future.
What Does the Future Hold?
Speaking of which, the road is not necessarily a smooth one for fintech. There have been some recent shocks to the industry, particularly in the cryptocurrency sphere. One of the larger cryptocurrency exchange services, FTX, collapsed under the weight of negligent management and non-existent accounting practices, leading to significant impacts for nation states and private investment firms alike.
The collapse has introduced an element of fear to certain corners of crypto and illustrated well the risk that start-ups afford early adopters. But essential fintech services unmoored from crypto remain safe investments, and new technology continues to be adopted – indicating a strong year for fintech investment in 2023.