As with anything new, and in terms of industry, the 8 years or so of Fintech makes it a relatively new, myths emerge about almost every aspect of it, often as a result of the fact that people generally don’t understand it. Fintech has grown rapidly, and the myths surrounding it have grown too.
With that in mind, it is worth noting the 5 most common myths about the Fintech Industry today:
1. It’s all about money
Perhaps the most common myth about Fintech is that it is an industry that only deals with money, and more specifically lending and payment. In fact, Fintech reaches a long way beyond lending and payment, although, with around 80% of US Fintech involved in those two subjects, it is easy to see where the myth originated. In fact, from Insurance to fraud detection, Fintech has proven to be adaptable, with innovators continually finding new applications.
2. The investment levels mean it’s a bubble
This idea has its roots in the early 2000’s and the dot-com bubble that stung a lot of investors. Like elephants, investors never forget, and so today when something associated with new technology is attracting a lot of investment, those who lost out tend to point back to those days and shouting ‘bubble.’
But is it really justified? There are currently over 50 fintech organizations that are worth more than a $Billion. Some who have gone public and increased in value, so it’s clear that there are significant differences, and rather than a bubble, it is the birth of a whole new industry that is providing valuable and useful services.
3. The banks will squash Fintech
This one stems from the idea that Fintech and banks are at war, and simply can’t coexist. If you see fintech developments as competitors to traditional banking, then the idea that banks would be somehow ‘at war’ with fintech companies is plausible. However, the truth is that many fintech developments integrate into existing systems, enhancing performance and enabling new features, and in fact, many banks are actively investing in fintech systems.
4. Regulations will destroy the industry
This one appears all the time, the idea that fintech is just one regulation enactment away from doom. While government regulation has held various industries back in the past, the reality of fintech is that industry leaders were well aware of such risks, and they have actively sought partnerships with governments to avoid such issues. In fact, through lobbying and partnership, governments across the world are actively involved in fintech research themselves, finding ways to exploit the potential of the technology to aid in all areas of administration.
Mix financial dealings and the internet and you have a potential security issue, but this has been turned into the myth that there is no security in fintech and it exposes all financial details it deals with.
The source of this kind of myth is unknown but likely arises from misunderstanding how world-class financial apps are deployed and serviced. In fact, fintech companies use the same standards of security and identity checks we expect from the banking industry itself, and while there are always risks to online operations, they are no more than any financial services.