Introduction to Fintech
How Artificial Intelligence (AI), Blockchain, Cloud Computing, and Big Data may be the future of finance
Introduction to Fintech
Fintech is a relatively new industry utilizing technological innovations to allow technology to serve finance and improve financial efficiency. While innovation in technology continues to evolve over time, the four major subsectors in the field currently include Artificial Intelligence (AI), Blockchain, Cloud Computing, and Big Data.
These subsectors have all been developed within the last 25 years and are developing at a high rate of innovation, causing what is known as disruptive innovation, a term defined as “a new market and/or value network that enters at the bottom of an existing market and eventually displaces established market-leading firms, products, and alliances”. Disruptive innovation happened to Blockbuster when Netflix created streaming services and when Uber replaced traditional taxicab services. In the case of fintech, it is disrupting the traditional financial industry at a rate that warrants examination and study.
Fintech Companies
While the race to the top of the fintech industry can be tracked by new companies who are breaking new grounds and maximizing the potential of new technologies, Stripe, Klarna, FTX, Chime, and Ripple are 5 most valuable companies according to Forbes in June 2022. Here is a brief overview of these companies using their valuations and services:
Here is a SWOT Analysis of these top 5 companies:
The Scope of Blockchain Technology
A blockchain is defined as a growing list of records called blocks that are securely linked together using cryptography. The technology is evolving systems in the traditional financial industry and economic markets by innovating systems and models that have advanced security, greater transparency, instant traceability, increased efficiency, and speed, and maximize automation. Blockchain technology when compares to the traditional financial industry has so many advantages, governments are starting to place new policies that allow for cryptocurrencies to exist legally and expand on what makes them so advantageous to their users and investors. Blockchain technology provides a foundation for governments, citizens, and businesses to trust one another which is increasing the scope of what’s possible in our everchanging society which has grown increasingly skeptical amidst conflict at local, national, and international levels.
Non-Fungable Tokens (NFTs)
Amidst such rapid innovations in the blockchain subsector, Non-Fungable Tokens (also known as NFTs) have become an increasingly popular method for artists and designers to sell and distribute their work to collectors and investors. The ownership of NFTs has recorded blockchains and can be transferred by the original creator to an owner who can then sell or trade the NFT. The result of this technology is building on top of the art market, which has not seen much innovation since the creation of large auction companies such as Sotheby’s and Christy’s. In the next 5 years, digital ownership of NFTs will have the power to displace the traditional art market by creating a more reliable network of not only digital artwork but a transparent and reliable blockchain that tracks the creation and distribution of traditional artwork, as well.
Conclusion
Overall, the result of the fintech industry and its subsectors are evolving the world’s economy at an alarming rate which is drawing the attention of all sorts of investors, both young and old. While the future is always uncertain, the trajectory based on the last several years of this industry expansion means early adopters may be akin to early investors at Apple and Microsoft in the 1990s. Doubt will eventually be displaced by the mass adoption of technologies that rein superior to the traditional economy which is slower, less transparent, and full of fraudulent activity. Will the blockchain replace traditional physical money? Only time will tell.
Bibliography
- Ab Rahman, Airini; et al. (2017). “Emerging Technologies with Disruptive Effects: A Review”. PERINTIS eJournal. 7 (2). Retrieved 21 December 2017.
- Beeple’s Masterwork: The First Purely Digital Artwork Offered at Christie’s | Christie’s. https://www.christies.com/features/Monumental-collage-by-Beeple-is-first-purely-digital-artwork-NFT-to-come-to-auction-11510-7.aspx. Accessed 9 Aug. 2022.
- Chen, Chiu-Chin; Liao, Chia-Chun (September 15, 2021). Research on the development of Fintech combined with AIoT. IEEE. doi:10.1109/icce-tw52618.2021.9602952
- Contreras, Isabel. “The 10 Biggest Fintech Companies In America 2022.” Forbes, https://www.forbes.com/sites/isabelcontreras/2022/06/07/the-10-biggest-fintech-companies-in-america-2022/. Accessed 8 July 2022.
- Khamis, Alaa. “AI and Disruptive Innovation.” Medium, 28 May 2020, https://towardsdatascience.com/ai-and-disruptive-innovation-393ee89eb5dd.
