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Have you heard of Fintech?

Not something you see in the general news, but Fintech is revolutionising the way money and banks work.  It stands for 'Financial Technology' and is at its basic level about how technology is used to make and receive payments.  I’m writing this item after the Governor of the Bank of England, Mark Carney, has just highlighted the importance of ensuring the UK keeps pace with the radical changes in payments and systems.

So how does that directly affect you?  Well, probably not too much at present, but ‘behind the scenes’ governments, banks and big companies are looking at making financial transactions quicker, safer, and more reliable.

Fintech is an all-encompassing term for any technical innovation with respect to how people and organisations transact financial business.  Originally it applied to computer technology but with the explosion of the mobile sphere it now includes all manner of personal and commercial finance.  The key areas are mobile payments, money transfers, loans, fundraising and asset management. 

Mobile payments are a key aspect of this revolution in Fintech.  The use of contactless credit and debit cards has exploded.  The over 60s have adopted contactless payments more than any other age group in the past year (perhaps not having to remember a PIN contributed to this?).  However, in another recent survey almost a third of shoppers 'don't trust' contactless technology.

Another facet of Fintech that isn’t seen by the public is a system called distributed ledgers. Sensitive and financial data is not kept in one place and therefore almost impossible to be stolen or falsified.  The ‘virtual currency’ called Bitcoin uses this technology (search the Forum for ‘Bitcoin’ for more information).

Fintech play a key role in the relatively new phenomenon called crowdfunding where funding a project or business is achieved by raising many small amounts of money from a large number of people.

An area (where banks see their profits being hit) is peer-to-peer lending made possible by Fintech.  Money is lent to individuals or businesses using online services that match lenders directly with borrowers, thus cutting out lucrative charges for the central banks.

So Fintech is having a great deal of influence on the world today and the Bank of England is recognising the need to stay sharp to keep the UK in the forefront of financial services.

Phil on 19/6/16
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