Finance and Technology; Basic Principles
Finance and Technology have always been intertwined, from the invention of the abacus to make financial calculations easier to the mammoth supercomputers that are used to drive complex financial models today.
The fintech industry was born out of that merger, and now the majority of financial activity is carried out on mobile phones, enabling more people to have access to financial services.
Technological disruptions over the last few decades have changed how we communicate, talk, make purchases, and do business. Emerging technologies in the financial services industry have consistently disrupted how consumers interact with their money, what they expect from financial institutions, and how those organizations operate. Today, new technologies make processes easier, more efficient, reduce errors, improve communication, and change how consumers see and interact with money.
What is Fintech (Financial Technology)?
Fintech is a combination of the words “finance” and “technology.” Although it’s a blanket term that can mean many different things, broadly speaking, it describes the evolution of an industry where new technology use-cases are developed and deployed to streamline more traditional-looking finance functions.
While the general public typically associates fintech with really cutting-edge new concepts like blockchain and algorithmic trading, the term applies to a very wide variety of much more “boring” applications. They include, but are not limited to, everyday banking, insurance, and other back-office risk management functions.
Mobile banking — something that hundreds of millions of people around the world take completely for granted — is actually technology supporting the delivery of traditional banking services (aka fintech). Even your Starbucks app is a form of financial technology in that it facilitates payments and a proprietary rewards program using a mobile device.
The competitiveness in the market requires innovative solutions that are becoming increasingly important for the growth of the global economy and solving the problems of business and society as a whole.
Havelet Finance Limited strives to introduce new technologies in every project, thereby contributing to the achievement of investment goals and enhancement of clients’ reputation. For our team, innovation is associated with such cutting-edge concepts as project finance, artificial intelligence, industry 4.0 and automation.
These new global trends are dominating the economy, changing businesses and customers. In order to ensure the highest level of our financial and consulting services, we support scientific research and work closely with leading scientific institutions both in Spain and in other countries of the world.
Technological Superiority and Financial Stability
For our team, innovation is associated with such cutting-edge concepts as project finance, artificial intelligence, industry 4.0 and automation. These new global trends are dominating the economy, changing businesses and customers. In order to ensure the highest level of our financial and consulting services, we support scientific research and work closely with leading scientific institutions both in Spain and in other countries of the world. Havelet Finance Limited offerings include:
•Funding with a minimum contribution of the initiator.
•Combined schemes for long-term project financing.
•Realistic and efficient investment models.
•Innovations in chemical waste disposal and energy storage.
•Automated production control systems.
•Logistics solutions and much more.
Providing services in the field of international engineering, we, together with respected European partners, recognize the importance of R&D and flexible financial instruments for big business. We care about achieving maximum efficiency and reliability of industrial, energy, agricultural, environmental and infrastructure projects.
Understanding Financial Technology
Fintech is considered by many to be a relatively recent development, which is not entirely accurate. While it has evolved very quickly over the last decade, that’s mainly due to advancements in technology, more generally, which are now being applied to the finance sector.
Financial institutions have sought to streamline service delivery and cut costs by using technology for many decades, including the advent of the first automated teller machine (ATM) as far back as the 1960s. Even credit cards, which predate ATMs, were a revolutionary technological advancement in the payments space relative to cash and cheques.
The technologies that underpin fintech business models vary considerably. They include blockchain technology, artificial intelligence (AI), machine learning, and other big data functions like robotic processing automation (RPA). Each use case is unique, but the underlying theme is a collective effort to disaggregate the financial services sector, which, historically, has enjoyed a highly protected status due to high levels of regulation.
How are Fintechs Impacting Traditional Financial Services Firms?
Traditional financial services providers (mainly banks and credit unions) serve three core functions:
- They hold money — including deposits and a variety of investment products.
- They lend money — including both secured loans (like mortgages) and unsecured loans (like student lines of credit).
- They move money — everything from simple, everyday payments to international money transfers using global networks like SWIFT (Society for Worldwide Interbank Financial Telecommunications).
Cryptocurrencies, for example, have been a major development in the payments space (moving money). And while there is much debate about whether or not cryptocurrencies are actual currencies, there is no doubt that they can serve as a medium of exchange.
The blockchain technology that underpins the various cryptos exists with the principal purpose of decentralizing (the historically very centralized) finance sector — bypassing traditional banks, financial institutions, and payment channels — often called the legacy financial system. Defi is itself a recent term and a by-product of the fintech revolution. It’s a combination of the words “decentralized finance.”
Countless other fintechs in the payment space have slowly started chipping away at the legacy financial system, including apps that have become everyday household names like Stripe, Venmo, Alipay, and even Apple Pay.
The lending money component of traditional financial services firms is being disrupted by fintech businesses as well. They include new products and services like buy-now-pay-later (BNPL), peer-to-peer lending platforms (P2P), and a variety of fast and highly automated underwriting programs (using AI and RPA-driven algorithms) to drive speedy credit decisions and fundings for both consumers and businesses — eliminating the friction of borrowing from a traditional financial services firm.
And finally, the financial services industry’s traditional function of holding money is not immune to the fintech revolution, either. These include altogether virtual banks, which hold charters and clear all required regulatory hurdles within their various jurisdictions.
The business of investing has been particularly transformed, with the democratization of trading effectively hollowing out the brokerage industry as we know it. They were formerly very high-margin, fee-based businesses, but online discount brokerages have forced many firms to waive their fees altogether in order to remain competitive.
An entire generation of young consumers engage almost exclusively with robo-advisors (like Wealthsimple) and savings apps (like Acorn); they rarely set foot in a physical bank branch.
The fintech revolution has created a variety of important and growing subcategories. They include the aforementioned “defi,” “insuretech” (insurance technologies), and “regtech” (regulation technology), among others.