Fintech: Disrupter to normaliser

Contrary to popular perception, financial technology (fintech) has been around for a while, but only in recent years has it appeared to take over.

- ZAINAB MANSOOR

Since the launch of the first credit card with a magnetic stripe in the 1960s, fintech – the ever-growing integration between digital technology and finance that enhances financial services offered to businesses and consumers – has grown up and out.

Fintech – also interchangeably used for firms that provide creative financial solutions – has leveraged various aspects of consumer life – from mobile payments to investment opportunities – effectively revolutionising how consumers manage their finances. A once-distant platform reserved primarily for back-end systems of financial institutions, fintech – the once disruptor, now normaliser – encompasses a variety of consumer-facing applications. Trading stocks, furnishing mobile payments, transferring funds or managing your insurance (often on your smartphone) has never been this easy.

In essence, fintech has grown in momentum and usage and unsurprisingly, global trends reflect the same – according to Ernst and Young’s Global Fintech Adoption Index 2019, surveying 27,000 consumers across 27 markets, China and India both boast an 87 per cent fintech adoption rate while Russia and South Africa tie in at close second with 82 per cent. Meanwhile, the global fintech adoption rate in 2019 stood at 64 per cent, which means that every two out of three people have used it in some way. Regionally, the MENA fintech market will reach a value of $2.5bn by 2022, according to research company MENA Research Partners.

In terms of categorisation, as the EY’s index noted, two key fintech offerings exist: disrupted and invented. A disrupted fintech service is one that’s been historically offered by incumbents such as foreign exchange trading and automotive insurance. Service providers have simply leveraged technology to disrupt the traditional way by including enhanced capabilities, convenience and cost-effectiveness into their offerings.