Welcome to Technolo-Three: FinTech’s third wave imminent

November 29, 2019

2 min read

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What's going on here?

FinTech is entering a third phase of development.

What does this mean?

Developing in three distinct phases, Financial Technology, or “Fintech”, can be traced back to the 2008 financial crisis. The financial crisis caused greater regulation to be placed on the financial services sector, and some lines of business were no longer profitable for big banks. This created an opening for tech startups, which met the demands of the regulation and the new consumer market, and set in motion the first wave of development. 

The second wave took advantage of mobile technology, with its easy access to consumers via mobile applications. Examples include the internet only banks, such as Monzo, which use a mobile application to provide banking services rather than the traditional physical bank. In the second stage many of these fintech startups present as a competitor to traditional financial institutions. 

The third wave is seemingly now upon us.

What's the big picture effect?

The majority consider the third wave will comprise of startups and traditional providers entering into partnerships. Startups will look to sell their services to the big banks, with the benefits being that they can leverage each other’s strengths. For example, banks have a loyal customer base that startups lack access to, whereas startups can offer innovation and greater flexibility at a level banks often cannot. 

With startups potentially having access to the funds available to big banks, development and innovation could reach an all-time high. Thus collaboration and partnerships between banking giants and tech savvy startups would create a much more competitive financial services sector

Others have considered that another feature of a third wave of development may comprise of greater automation of services. If this were the case then we could expect to see greater regulation in the area, especially regarding when and to what extent technology is able to make automated decisions on behalf of a person. 

Regardless of what the third wave has in store, one thing is certain, and that is that the industry continues to change at a startling rate.

Report written by Julie Lawford

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