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The Future of FinTech

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(Harvard University - Harvard Taiwan Student Association)

- The FinTech Revolution

In just two decades, fintech -- a hybrid of "finance" and "technology" -- has suddenly emerged to revolutionize the financial services industry as we know it. This dynamic industry is fueled by innovations that have shaped a generation, each seemingly more game-changing than the last.

Financial technology (fintech) used to be a back-office support function for bankers and traders. Venture capitalists have made little investment in the industry. Public companies in the industry are rarely compared to Silicon Valley's high-growth darlings. 

But things have changed dramatically. Private venture capital has skyrocketed over the past decade, and so has the share of investment going into fintech. Fintech has found its place in the innovation economy, and it’s moving so fast that it’s becoming increasingly difficult to separate hype from reality. Chatbots and artificial intelligence, blockchain and crypto assets, robo-advisors and neo-banks, and countless other digital symptoms have become buzzwords in the trade media over the past few years. 

Large multinational banks have set up corporate venture capital arms and digital incubators to invest in, acquire or replicate the solutions of emerging companies. Globally, Eastern technology companies have launched messaging super apps and embedded financial services with hundreds of millions of users, exceeding the potential of Western regulatory jurisdictions. U.S. tech companies have also delved deep, looking for ways to offer financial products without touching third-rail regulation.


- Fintech and the Future of Finance

Fintech, or the application of digital technologies to financial services, is reshaping the future of finance, and the COVID-19 pandemic has accelerated this process. The continued digitization of financial services and money creates opportunities to build more inclusive and efficient financial services and promote economic development. 

FinTech is rapidly changing the financial industry landscape and blurring the lines between financial companies and the financial industry. This brings about a paradigm shift with multiple policy implications, including:

  • Foster beneficial innovation and competition while managing risk.
  • As the embedment of financial services blurs the boundaries of the financial sector, the regulatory horizon is broadened and the regulatory landscape reassessed.
  • Be mindful of changing policy trade-offs as fintech adoption deepens.
  • Review the regulatory, supervisory and supervisory framework to ensure it is fit for purpose and enables authorities to build a safe, efficient and inclusive financial system.
  • Anticipate market structural trends and actively shape them to foster competition and competition in the financial sector.
  • Modernize and open financial infrastructure to promote competition and competition.
  • Ensuring that public money remains appropriate for the digital world at a time when private currency solutions are rapidly evolving.
  • Given the supranational nature of FinTech, strong cross-border coordination and the sharing of information and best practices are pursued.

- An Inclusive Economy

An inclusive economy is one with greater opportunities for broader shared prosperity, especially for those who face the greatest barriers to improving their well-being. Quite simply, more people have more opportunities. Based on extensive input from experts, scholars, peers, and public opinion, the Rockefeller Foundation defines an inclusive economy through five interrelated characteristics: participation, equity, growth, sustainability, and stability. 

The unprecedented disruption caused by COVID-19 is accelerating the urgency of agility, adaptability and transformation. Industry structures and business models are being disrupted - the digitization of the economy is accelerating rapidly. An estimated 70% of the new value created in the economy over the next decade will be based on digital platform business models. However, 47% of the world's population is still not connected to the Internet.


- An Emerging Financial Services

We have entered the most profound era of change for financial services companies since the 1970s brought us index mutual funds, discount brokers and ATMs. No company is immune to impending disruption, and every company must develop a strategy to take advantage of the powerful advantages of the new financial technology (FinTech) revolution.

FinTech is the future of transactions and commerce, a synthesis of financial technologies that describe the emerging financial services sector of the 21st century. Fintech companies integrate technologies such as artificial intelligence, blockchain and data science into traditional finance to make it safer, faster and more efficient. Fintech is one of the fastest growing tech industries, with companies innovating in nearly every area of ​​finance; from payments and lending to credit scoring and stock trading. 

Fintech is an area that is fundamentally changing the way we live as a society and how we conduct business in a professional manner. It is dramatically reshaping human economic life. It is opening up markets, investment and credit. Fintech is inventing new solutions to age-old financial problems. It lowered fees, disintermediated banking, and brought financial services to emerging economies. The rise of fintech has opened up a world of possibilities. Businesses can offer more services than ever before, and at a fraction of the price.


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[Mount Everest: One Man and His Dog - Black Sail]

- Artificial Intelligence (AI) in Finance

Artificial intelligence (AI) is revolutionizing the way consumers and companies access and manage their finances. AI in finance covers everything from chatbot assistants to fraud detection and task automation. 

Most banks are highly aware of the potential benefits of AI. The benefits of implementing AI in finance (for task automation, fraud detection, and providing personalized recommendations) are enormous. 

Technological advancements, increased user acceptance, and shifts in regulatory frameworks will accelerate the decision of financial institutions (FIs) to adopt AI. 

Banks using artificial intelligence can greatly improve the customer experience by providing 24/7 access to their accounts and financial advisory services. Front- and middle-office AI applications can transform the financial industry by enabling frictionless 24/7 customer interactions, reducing the need for repetitive work, reducing false positives and human error, and saving money


- Moving Towards A Cashless Society

The next decade is expected to be swept away by technological disruption as we digitize every aspect of our daily lives. The way we pay for things is no different. In 2021, retail e-commerce sales amounted to approximately 5.2 trillion U.S. dollars worldwide. This figure is forecast to grow by 56 percent over the next years, reaching about 8.1 trillion dollars by 2026, and smartphones are becoming ubiquitous even in the least developed countries. 

Banks are slowly closing their brick-and-mortar branches in favor of full digitization, while people are generally tired of waiting days on end for international transactions to be executed. 

All these developments point to one question: What's the point of cash? While it can still be used, especially between banks, physical currency is expensive to store, transfer, and produce. Most coins produced are worth less than the materials used to make them. 

As the COVID-19 pandemic accelerates our transition to a cashless economy, it's important to ensure the transition is seamless and prepared for the new financial reality on the other side. The world is moving towards this exciting future -- a cashless society.



[More to come ...]


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