FinTech or financial technology as it is better known is a new sector which has seen unbelievable growth in the past few years. It does not come as a surprise that there are some who understand it better than others and hence, there are many misconceptions about it that are easily believed.
Many are of the opinion that it is on the path of taking out conventional financial methodologies and establishments. This is not entirely true. This article will debunk six common myths and paint a better, brighter picture of financial technology.
THE BUBBLE WILL BURST
The concept of a bubble first came into the market when growth and start-up companies were being formed rapidly. But this is not analogous to that situation. This is true because there are now more than 45 FinTech giants in the industry, each of them valued over 1 billion USD. Five of them have even gone public which shows that even if there was a bubble, it has solidified into something bigger and will take more than a pinprick to break open.
BATTLE BETWEEN BANKS AND THE FINTECH INDUSTRY
This is clearly a conspiracy theory. There is no “battle” going on. Each year more and more banks are injecting money into this sector to come up with better and efficient solutions for conventional banking issues. A recent study of Accenture finds that around 80% banks in London are looking into FinTech as a solution while 60% of these banks were ready to invest substantial amounts of money to check out the true potential of FinTech.
FINTECH IS NOT SAFE
Although it is relatively new in the world, it is not by any means unsafe. There is always a possibility of a cyber-attack but the US nuclear program is also under constant threat. This does not diminish the potential and this is one of the many myths going around that FinTech is unsafe. It is as (un)safe as any of the other sectors.
FINTECH WILL ONLY REACH LARGE MARKETS
Another misconception going around is that FinTech is only being handled in the tech hot spots of the world like Silicon Valley, London, and Hong Kong etc. This is not true, FinTech is helping many small-scale markets and is causing many businesses to grow in third world countries. Emerging markets like South East Asia and Latin America are seeing growth due to the positive influence of FinTech.
FINTECH IS ONLY ABOUT LENDING AND PAYING MONEY
80% of the activity related to FinTech is in fact related to lending and paying money, However, there are a number of other ways that this industry is being utilized such as insurance, market provisioning, and capital raising.
THERE ARE MANY “ANTI-FINTECH” REGULATIONS
Government regulations curb any new and emerging sector and FinTech is no exception. This is dealt with enhanced cooperation with the government sector to ease any complications and to make the transition from conventional methods to modern methods easier.
As discussed in this article, FinTech is all about growth. In the years to come, this will be seen as a constant rather than uncertainty.