What is Fintech?

Financial Asset Management broadly defines fintech as technology applied to financial services of any kind. Whether it is a business managing their financials or a customer shopping online. Fintech encompasses a wide range of goods and services. Going online to find the best mortgage rate is fintech. Paypal, Venmo, and Apple Pay are all fintech. Fintech now dominates processing of transactions online.

Fintech has been around a long time, but only recently has it exploded so dramatically. ATMs are considered one of the first big appearances of fintech. Now fintech has radically changed purchasing, money transfer, investment, asset management, and mortgages, amongst other things.

Regulations

Freedom Financial Asset Management knows people are often wary of where they put their hard-earned money. Regulation is created to protect consumers.The crash of 2007 resulted in stricter regulations on the financial services industries. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 was the biggest set of regulatory changes since the Great Depression.

Specifically, these regulations affected large companies. Consequently, smaller startups were able to take advantage of bigger companies having their hands tied. Small companies were free to innovate and worry about consequences later. The result was (and continues to be) new, higher consumer expectations for accessible and convenient financial services. It’s all the big companies can do to stay competitive in a changing landscape.

To fight back, many of the bigger companies have outsourced. Regulatory issues raise internal costs for big corporations so they use an outside resource. Freedom Financial Asset Management has seen this with mortgage servicing platforms. Banks have largely adopted these platforms rather than creating their own.

Banks Compete with Tech Providers

Freedom Financial Asset Management has seen that big banks aren’t willingly giving up their share of the market. Banks have decided to try and recapture the personal payment market that has been swept up by services like Paypal, Venmo, and Square. Banks have partnered to produce a service called Zelle, designed for person to person payments. This service is being adopted by over 30 banks including Bank of America, BB&T, Capital One, JPMorgan Chase and Wells Fargo.

The small start-ups originally disrupting the big banks with FinTech are dealing with a taste of their medicine. It will be interesting to see if Zelle can retake the market share the banks lost.

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