Whether we call it Fintech, FinTech, fintech or financial technology we have all seen it dominate the business news as of late. The term fintech may have been used first in the 1980’s, but now in 2017, it is a dynamic and quickly growing economic powerhouse. It has impacted vast swaths of the financial world and has its fingers in everybody’s proverbial pies, including investing.
A Brief History of Fintech
Fintech was an industry at the cusp in 2007, but the recession left a hole that new financial startups rushed into with a dizzying speed that took many experts by surprise. Capitalizing on their smaller size and flexibility as well as not fitting into regulation categories fintech companies stepped in to provide services that consumers were only too happy to purchase from non-traditional financial enterprises. Instead of the mistrusted suits, office towers, confusing stock pages of the newspapers or the rolodexes of the 1980’s are phone apps, low-cost online accounts, automated software and a whole slew of other new ways of interacting with the financial world. Since the Economist heralded “the fintech revolution” in May of 2015, this sector has grown by an estimated 10 billion dollars.
The mistrust in traditional banking and investment companies opened a space in the market for new players on the field. With lower overheads, these companies were able to offer lower fees, and their focus on technology brought the experience and interface to the palm of the user. The smartphone revolution in banking has forever changed the way that customers see their finances. To be able to invest in a similar way is a natural next step.
A New Type of Customer
New ways of looking at the world of investing have drawn new customers that have traditionally either been kept out of the markets or been too intimidated to enter them.
It used to be impossible to open a trading account with anything less than $1000 and in most cases was difficult without at least six figures in the account. With new banking and other financial services, customers are demanding a new paradigm that reduces the price of admission. In this information age, customers are demanding more transparency and information from all aspects of their financial life. They expect to access their investment accounts and portfolio and interact either by computer or smartphone to view company information and keep abreast of the latest tweet. Investing has traditionally been intimidating as a result of the sheer amount of data that needs to be understood to make informed decisions.
Investment customers expect a different kind of investment service.
A New Type of Investing Service
Leading the way is technology that fuses tried and true methods with fintech to enable firms to provide services that range from fund-and-forget to fully managed accounts. Known collectively as robo advisor investing services, these companies enable investors to invest but take away the heavy lifting by providing automated fund managing.
Another feature of most of these services is the low or in some cases non-existent minimum deposits to get started. These accounts also gives the investor an incredible amount of access to portfolio details including performance.
The Future of Investing
With fintech forecasted to keep growing at an unstoppable rate, it is clear that the future of investing looks nothing like movies such as Wallstreet and more like a science future. Also clear is that the traditional face of the investing customer is also changing forever.