Last year Inc. declared it to be one of “the most promising industries of 2015,” but have you even heard of it? We’re talking about fintech, and it’s revolutionizing how banks do business. In fact, the field is experiencing such rapid growth that US banking regulators are calling for new regulatory measures aimed at promoting “responsible innovation.” Is a career in fintech in your future? Let’s take a closer look at this game-changer in the financial industry, along with why a career in fintech may be right for you.
The 411 on Fintech
A portmanteau of the words “financial” and “technology,” fintech has been defined as “a line of business based on using software to provide financial services.”
Typically the domain of startups, fintech largely focuses on disruptive innovation. (Although some argue that fintech is more augmentative than disruptive in nature.) Fintech sub-industries span everything from algorithmic asset management to peer-to-peer lending. Additional fintech sub-industries? Thematic investing, payments, digital currency, credit scoring, education lending, cyber security, working capital management, and others — all sharing a common theme: the imperative to improve the efficiency of financial markets and systems through technology.
But is fintech truly worthy of all the buzz it’s been generating? The numbers speak for themselves: According to a report from Accenture, global investment in this sector spiked to $12.2 billion in 2014 — tripling the prior year’s $4.05 billion. And while the US tops the list in terms of fintech investment, it’s on the rise everywhere from Asia to Africa with Europe exhibiting the fastest rates of growth.
In short, fintech is transforming the traditional business model. And with that transformation come near-endless opportunities for entrepreneurs looking to start businesses as well as for existing companies looking to expand.
Why Fintech Matters
For many years the financial industry rested easy. While new technology might have penetrated its operations, banks ultimately retained control over how and when new digital financial products and services were introduced to the market. The combination of fallout from the 2007-2008 financial crisis and increasingly sophisticated technology has dispersed the power beyond banks thereby restoring balance and reshaping the industry.
In other words, fintech is changing the finance world for the better. From lower costs to more options, the potential of data-driven lending is not only huge, but uniquely profound in that it serves a previously underserved constituency: consumers.
Is Fintech Right For You?
We’ve already established how fintech is making a difference, which might leave you wondering whether you should add your talents to the effort.
If you are thinking about a career as a financial technologist, there’s good news: there’s a major fintech job boom underway. Consider London, for example, where experts are predicting that the sector will add more than 46,000 jobs in the decade between 2014 and 2024. The takeaway? If you’re looking for a job that combines security and financial payoffs, fintech is well positioned to offer both.
Fintech is also uniquely suited to Millennials — not just in terms of the fact that the products and services offered by fintech speak to their particular sensibilities, but also in terms of their role in driving the market. After all, Millennials are not only the first truly digital generation, but they also witnessed their parents bear the brunt of the financial collapse. It follows that, according to Fintech Week, “Many of the younger generation have completely lost faith in the banking world – and who are we to blame them? They need an alternative solution, and what they understand is technology and relentless innovation – a gap in the market which Fintech has now filled.”
For some younger people, meanwhile, the allure of fintech is also a very personal one: With student debt crippling the futures of many of today’s grads, fintech’s potential impact on the student loan refinancing market — both in terms of the creation of new products and serves as well as in prompting the banking industry to raise its own game in response– is particularly compelling. Imagine a future in which student loans are inherently affordable. Fintech may hold the key.
The best part? Not only is the fintech industry alive, well, and ripe with opportunities, but there are many ways to get in on the action. From formal business and finance studies to a foundation in engineering and technology, a multitude of avenues lead into this red-hot field — all with the potential to change your life, and maybe even the world, too.