How Has Technology Transformed Businesses in Finance?
The financial sector is a crucial lynchpin for the UK's economy, describing as it does a diverse field of complex disciplines and solutions. The financial sector has been buoyed by the development of specific technologies, that have enabled previously impossible solutions and outcomes - but in what specific ways has technology transformed financial business?
Tech and the Finance Industry
Tech and finance have gone hand-in-hand since the industrial revolution, as mechanical counting solutions gave way to early electronics and the eventual handling of back-end financial transactions through digital means. The late 20th century saw the widespread handling of stocks and investments, as well as the administration of savings and wealth, using sophisticated tech platforms.
Thanks to technological innovations, wealth managers have been able to flourish, using real-time analysis of stock movements and global sales trends to effectively manage portfolios on behalf of high-value clients. Meanwhile, new tech solutions have underpinned a new generation of shrewd investors, as crypto-based platforms take root in the mainstream.
Retail Investment: A New Era
Speaking of the mainstream, there has been significant change in the B2C side of financial technology, or fintech for short. Where fintech products had previously been exclusively geared towards back-end processes and the specific needs of financial institutions, new forms of accessible fintech entered retail markets – giving consumers hitherto unprecedented access to stock markets and share management tools.
These new tools resulted in an explosion in retail investment, which had its own impacts on global stock markets. Namely, the Game stop saga, but that story deserves a whole article for itself. Today, there is more accessibility than ever, and more consumers can directly attempt to grow their own wealth via trading platforms with just the push of button and an internet connection.
Online Banking
Finally, perhaps the most impactful result of technological innovation in finance is the widespread adoption of online banking solutions. Where the vast majority of consumers are not too savvy with stocks and investment processes, nor with the back-end management of wealth and financial transactions, banking is a fundamental consumer activity.
As such, digital banking technology has been a profound intervention in consumer habits, giving the individual account holder vastly more control over their finances and savings information. With this data, consumers are able to act more shrewdly with regard to their savings.
The advent of digital banking technology levelled the playing field for banking institutions, enabling smaller alternative banking providers to capitalise on the slow uptake of traditional institutions. Banking apps like Monzo for example, has pioneered the digital 'savings pot', where transactions are rounded up and the 'change' saved in a ringfenced fund for future access.
Innovations like these have emboldened smaller businesses and introduced vital competition in a sphere of the financial industry where there previously was none. This competition is sure to guarantee future development of consumer-side fintech concepts and products, which will further strengthen existing fintech companies and further embolden consumers to handle their own finances.