Financial technology, or FinTech for short, is one of the most exciting – and fastest growing – areas in global business today. While the definition may be simple, products and companies that employ newly developed digital and online technologies in the banking and financial services industries, how it is used, and its impact on consumers is much more complex. In fact, in a relatively short period of time, the emergence of a new generation of FinTech has greatly impacted how we do business, transact as customers, and think about the future of finance. Among other things, it is significantly blurring the lines between business services, allowing bankers, advisers, and technology providers to provide nearly identical services.
Fintech as Drivers of innovation
A variety of factors are at work when we look at the advancement of FinTech. Technological advancements have changed how we do nearly everything in our day-to-day lives. Technologies such as IoT, AI, blockchain and cloud computing are the major drivers of FinTech companies.
Consumer behaviour, particularly in Gen X, Y and Z, has shifted and the previously existing financial systems in some markets are simply not keeping pace with societal changes, allowing technology enabled players to enter the market.
Barriers to entry have lowered as technology has flourished, forcing financial institutions to change or be left behind. It has opened the door for new challenger start-ups, like Monzo in the banking industry, who are targeting consumers with different needs and behaviours. Greater access to information through analytics, artificial intelligence, and cloud computing allow companies to see trends – and adjust to them – more quickly.
Investment in the sector has been gargantuan and is continuing to grow rapidly, ensuring we will see many more advancements in the near future.
Digitization of Finance
Digital disruptions have heavily impacted a variety of habits and behaviors in the professional world. Technology combined with smartphones/ mobile devices and the internet provides numerous benefits to the customers as well as to financial establishments. With tighter regulations and changing customer demands, the financial applications and systems have become nimbler and progressive.
The following are a few of the key components of digital transformation of Finance.
- High Standardization – Finance functions integrated with technology systems with standardized processes and data lead to a high standardization.
- Highly Automated functions – Adoption of new technology tools lead to higher process automation for services such as money remittance, KYC verification, etc.
- Insight-driven functions: Digitalization has modified financial models in such a way that the resources concentrate more on deriving insights rather than focusing only on transactions.
- Improved customer experience: Availability of data, strong analytics and lightweight payment interfaces improve customer experience
- Better Service Delivery: The legacy systems integrated with new technologies have changed the financial operating model. The structured processes have improved service delivery.

Innovations which we are seeing in this space
Organizations are innovating and using technology in targeting, expanding services, re-configuring delivery channels, delivering proactive advice, integrating payments. Internationally, financial and tech giants are revolutionizing the financial services arena. Technology driven companies are entering the Finance space. Apple Card, G-Pay (by Google), Amazon Pay are a few such examples.
On the other hand, FinTechs are already experimenting with new mobile applications and voice-enabled gadgets to enhance both delivery and contextual personalization. As technologies continue to evolve, the fintech sector will continue to accelerate its investments in innovation and digital enhancements. From KYC to online payments, from bank reconciliation to applying loans, Fintechs are trying best to integrate their transactions with that of business. Fintechs have also started adopting targeted customer policy based on lifestyles, values, aspirations, mind sets and underserved needs. Financial institutions are expected to go beyond personalization by segment, to develop individualized communication and experiences for the segment of one, thanks to the power of Big Data and Analytics. Data availability, openness and advanced analytics have enabled these digital innovations.
On the other end, application programming interface (API), which is a software intermediary that allows two applications to talk to each other, are accelerating innovation and collaboration leading to expanded fintech ecosystems that could include more than just financial services to make a consumer’s lifestyle better. FinTechs are really emphasizing on providing the best consumer value proposition.
Few other innovations which are driving this space are the evolution of Chatbots to connect customers, seamless transaction to kiosks and express branches, distributed ledger technology for digital currency, RPA-robotic process automation to provide automated and digital workforce to manage complex and repeated tasks, and continue to disrupt financial services.
Emerging Technologies
Emerging technologies has changed the way day to day operations are run. It is necessary for finance professionals to understand these technologies and the impact on Finance These new ABCDs (Artificial Intelligence, Blockchain, cloud computing, cyber security, data analytics, Internet of Things, RPA etc) are discussed in brief below:
1. Artificial Intelligence
Artificial intelligence (AI) is an area of computer science that emphasizes the creation of intelligent machines that work and react like humans. Some of the activities computers with artificial intelligence are designed for include:
- Speech recognition
- Learning
- Planning
- Problem solving
In other words, it is Advanced computer systems that can simulate human capabilities or the task of getting computers and machines to do tasks that require intelligence when done by humans.
Examples in Finance include, Pattern Recognition in Banking, automated data entry, automated profiling and credit scorecard etc.
2. Blockchain
Block chain refers to the transparent, thrustless, and publicly accessible ledger that allows us to securely transfer the ownership of units of value using public key encryption and proof of work methods.
The technology uses decentralized consensus to maintain the network, which means it is not centrally controlled by a bank, corporation, or government. In fact, the larger the network grows and becomes increasingly decentralized, the more secure it becomes.
At its most basic level, blockchain is literally just a chain of blocks, but not in the traditional sense of those words. When we say the words “block” and “chain” in this context, we are actually talking about digital information (the “block”) stored in a public database (the “chain”).
Examples in Finance include, reduction in payments and reconciliation, KYC authentication, automated and real time clearing and settlement.
3. Cyber Security
Cyber security or information technology security are the techniques of protecting computers, networks, programs and data from unauthorized access or attacks that are aimed for exploitation.
Major areas covered are:
- Application security encompasses measures or countermeasures that are taken during the development life cycle to protect applications from threats that can come through flaws in the application design, development, deployment, upgrade or maintenance.
- Information Security – protects information from unauthorized access to avoid identity theft and to protect privacy. Major techniques used to cover this are: a) Identification, authentication & authorization of user, b) Cryptography.
- Disaster recovery planning is a process that includes performing risk assessment, establishing priorities, developing recovery strategies in case of a disaster. Any business should have a concrete plan for disaster recovery to resume normal business operations as quickly as possible after a disaster.
- Network security includes activities to protect the usability, reliability, integrity and safety of the network. Effective network security targets a variety of threats and stops them from entering or spreading on the network. Network security components include: a) Anti-virus and anti-spyware, b) Firewall, to block unauthorized access to your network, c) Intrusion prevention systems (IPS), to identify fast-spreading threats, such as zero-day or zero-hour attacks, and d) Virtual Private Networks (VPNs), to provide secure remote access.
4. Cloud Computing
“Cloud computing is a model for enabling ubiquitous, convenient, on-demand, network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management efforts or service provider interaction.”
Cloud Computing means the use of computing resources as a service through networks, like the internet. It is the use of various services, such as software development platforms, servers, storage, and software, over the different networks, often referred to as the “cloud.” Ex: Google apps.
It is a combination of hardware and software computing resources delivered as a network service. The location of the physical server and devices is not known to the end user. Service customers of cloud computing use “what they need on the internet” and “pay only for what they use”.
Examples in Finance include subscription-based apps such as Zoho Books, Quickbooks etc.
5. Data Analytics & Big Data
Data Analytics is defined as the science of examining raw and unprocessed data with the intention of drawing conclusions from the information thus derived. It involves a series of processes and techniques designed to take the initial data and having sanitized the data, removing any irregular or distorting elements and transforming it into a form appropriate for analysis so as to facilitate decision-making.
In simple terms, data analytics refers to the science of examining raw data with the purpose of drawing conclusions about that information.
From an accountant’s perspective Data Analytics is a generic term for Computer Assisted Audit Tools and Techniques (CAATTs) and covers the collection of tools, techniques and best practices to access and analyse digital data. Data Analytics empowers auditors to use technology to audit digital data thereby giving access to 100% of the data and to analyse data to infer insights from information. Data Analytics enables auditors to optimise audit time and add value.
Examples in Finance include credit modelling, Fraud preventive planning, risk-based planning, market demand forecast, preparing market models etc.
6. Internet of Things
The internet of things, or IoT, is a system of interrelated computing devices, mechanical and digital machines, objects, animals or people that are provided with unique identifiers (UIDs) and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction.
Examples in Finance includes, Inventory and Asset tracking, fraud prevention, optimising and tracking capacity management etc.
Reference
- Fintech Will Pave The Way For Better Financial Services in the Future – https://taxguru.in/finance/fintech-future-finance.html