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What is FinTech?

In the past 10 years, thanks to the emergence of open source structures such as cloud technologies, APIs, and apps, a new financial structure is booming. It is commonly known as FinTech.

What is FinTech and what changes will it bring?

I think FinTech is a new market that combines finance and technology. This new market still covers traditional financial services, including working capital, supply chain, payment processing, deposit accounts, life insurance, etc., but replaced the traditional structure with a new technology-based process.

In other words, FinTech is a whole new industry. It’s a bit like we would include Amazon when we talk about retailers. Is Amazon a retailer or an e-commerce company? Or both? I think Amazon is a digital delivery service provider because it both fulfills consumer orders and provides cloud services through Amazon Web Services.

In other words, it’s not a retailer at all, but a company in a whole new market.

I think FinTech is not just a new function developed by the financial industry, it is also an emerging digital financial market. Over time, it will replace traditional financial markets.

The concept of “tech giants supporting the financial industry” specifically refers to the provision of technical support services to banks by companies such as IBM, Unisys, and NCR in the 20th century. But these companies are not fintech companies, but outdated bank technology service providers.

It may be inaccurate to label emerging fintech companies as “replacing existing financial services provided by tech giants with new technologies” as some tech giants are transforming into fintech companies while others are Services are also being provided to these tech giants. Therefore, we need to define this market more accurately.

We talked a lot about fintech, as if it were just one thing, in fact, it was a collection of many things. The fintech market has a history of more than ten years, and some of the minor changes that have occurred need to be more informative, because just like other technologies, some of the technologies in fintech are being fired, some have been abandoned, and Some are about to dominate the mainstream.

We will talk about the tens of billions of dollars of investment pouring into the fintech market, the rise of industry unicorns and startups, theChallenges from tech giants and their strategies to open up new markets. In fact, according to KPMG’s “Fintech Pulse Report for the Fourth Quarter of 2016”, the amount of investment in the Fintech sector from 2013 to 2016 reached $ 100 billion.

From the perspective of investment distribution, the United States still occupies the bulk, thanks to Silicon Valley’s vibrant entrepreneurial investment network. Although it is not as it used to be, investment growth is still fast. Well-known financial services companies such as SoFi have still received US $ 500 million in investment from Silver Lake Capital. The company, with a market capitalization of just $ 4.3 billion, has attracted a total of $ 1.89 billion in investments.

Asia is also a popular market for fintech investment. 2016 was a record year for fintech investment in Asia. This market will continue to be bullish, driven by companies like Ant Financial, which has a market value of $ 60 billion.

In contrast, in 2016, Brexit had a negative impact on investment. According to data from the Financial Innovation Organization, the UK’s decision to leave the European Union has reduced investment by 1/3 in fintech startups, from $ 1.2 billion in 2015 to $ 783 million in 2016. What’s worse, according to KPMG estimates, total UK fintech investment fell by 85%, from $ 4.6 billion in 2015 to $ 654 million in 2016.

But this does not mean that London has lost its place. London is still considered one of the global financial centers. It has a vibrant technology entrepreneurial atmosphere and can create a favorable environment for the creation and expansion of fintech companies. This sets it apart from other European regions. Fintech investment in the rest of Europe fell from $ 10.9 billion in 2015 to $ 2.2 billion in 2016, a drop of 80%.

What exactly is fintech? It is no longer a single financial technology. As I mentioned earlier, fintech is like a retailer. So what are the related companies selling? From a fintech perspective, which financial areas have these companies automated?

Fintech is a technological revolution for the entire financial industry. It is a market that has expanded from one field to many different fields. In this market, there are regulatory technology, wealth management technology, insurance technology, etc., but also loans, data analysis, digital identity, network security, SME financing, inclusive finance, payment, robot consulting, and blockchain distributed ledger , New types of banks, etc. Cloud technology, the Internet of Things, artificial intelligence, machine learning, biometrics and a series of general technologies are helping Fintech to expand its possibilities.