When 'Tech' meets 'Fin'

Perhaps the madness of financial technology in 2016 is settled and perhaps it is now time to look back and calmly talk about what is FinTech. The so-called financial technology (FinTech) includes both finance and technology, that is, using technology to solve inherent problems and provide solutions in the financial market.

What does the 'Tech' part consist of?

The technology component is based on two large aspects: computer technology and internet technology. These include but are not limited to, the internet, big data, artificial intelligence, cloud computing, biometrics, and the recent rise of blockchain technology. Among them, artificial intelligence, big data, and cloud computing are the developed and utilised and are collectively called ABC.

Which financial areas do these technologies assist?These technological tools cover almost every aspect of the financial sector from basic banking to consumer finance, from insurance to funds and to financial regulations.

FinTech is not a concept that emerged out of nowhere, it also has it's own relatively long development history and is part of the worldwide innovation boom. Since the start the 1980s with the development of the computer industry revolution, computer technology has progressively matured. For the financial technology industry this became the perfect stage to feed technological accumulation. During this stage, digital information replaced the traditional paper files, making the possibility of using computer technology in the financial sector more foreseeable. At this stage, the United States became the prominent leader with it's absolute technological superiority.

China adopted financial technology with a delay, only beginning to explore and lay the groundwork around 2004. Due to China's population advantage and the daily increasing consumption demand, China's financial technology industry from the start of 2013 to 2016 saw great leaps forward in technological expertise and explosive developments. With the emergence of third party payment platforms such as Alipay, the ripple after-effect gave many other financial technology companies a shot in the arm and China's FinTech evolution began to overtake the US.

What about FinTech in Australia?

Australia's financial technology industry is highly regarded of and world leading. Up until now there are currently about 400 financial technology companies in Australia. Due to Australia's well-established financial system and regulatory system, Australian financial technology companies are growing rapidly. In 2015, Australia's financial technology industry output only totalled A$250 million, but it is expected to soar to A$4 billion in 2020. Unlike in China, 70% of Australian financial technology companies offer services to business, but Australian financial technology companies are not limited to that and also cover all aspects of the financial market sector. Australia is one of the leading wealth managers and has the fourth largest managed fund pool in the world, which exhibits space for potential international corporations and strong links between major FinTech markets. From data presented by KPMG below, we can already see an expansive Australia FinTech landscape. Can you find Tanggram?

What is the future of FinTech?

The first theme of financial technology is digital revolution, the second phase is ubiquitous connectivity, and the third phase is likely to be an in-depth analysis. In the near future, I believe that the third wave of technological eruptions with artificial intelligence as the core will surface in the field of financial technology. At this stage, people not only want financial data to be securely stored and wirelessly integrated, but also hope to in-depth analysis this data in order to produce more accurate and optimised flow of funds. Financial technology companies that specialising in such analysis may see pronounced developments at this stage. Some examples of this include: quantitative trading, financial modelling algorithms and mobile investment.

As an early-adopter of FinTech, we at Tanggram believe in the greatness of technology, encourage and stimulate financial progress and implement the concepts of financial technology and inclusive finance in a responsible, respectful manner.