One of the true advantages of the digital age is the vast amount of information which is at our fingertips. However, the vast amount of information sometimes has a significant drawback; over “facts” which are actually myths or outright fabrications. The ability to spread information quickly by “sharing” so-called news stories or on blogs, without fact-checking or other verification methods used in the pre-digital news age, has led to the massive growth of myths, rumours, and half-facts which are taken by many as fact. This offshoot of the digital age has spawned the launch of websites such as Snopes and television series such as Mythbusters.
Fintech, like any industry, is the subject of these myths and urban legends. At TransferGo, we believe in fostering an environment of transparency and aiding our customers to be informed and knowledgeable about how we do business and the rules and regulations that govern us and affect you. Therefore, we are launching an occasional series on TransferGo called “Mythbuster.”
Myth 1: Fintech is a bubble, destined to burst.
The concept of “bubbles” in markets first gained a foothold during the “dot com” era, where growth and funding in start-up websites was unparalleled. Venture capitalists and the public rushed into the market with the hope of getting in on the ground floor of the “next big thing.” The recent housing bubble in the US is another example of the bubble philosophy.
Fintech is a major growth area within the financial sector. Over thirty-five Fintech companies are valued at more than $1 billion and analysts predict the industry to grow to between $6-8 billion by 2018.
At the recent Innovate Finance conference held in London, both David Cameron and HRH Prince Charles declared their unequivocal support of the Fintech industry and their desire to aid in the sectors’ development.
TransferGo is proud to be a founding member of Innovate Finance and of our ability to secure funding from some of the more astute financial sector investors in the UK.
Fintech is indeed a fast-growing sector; however, it is not a fad but a vital and viable force in the area of personal and business financial services.
Myth 2: Banks and Fintech are locked in a battle.
Fintech is a natural evolution of the banking process. In fact Fintechs are often working with banks to help in their evolution. TransferGo works with banking partners in every country where we offer service as part of our “local-in, local-out” payment system.
Myth 3: Regulation will suppress innovation
The recent global financial crisis highlighted the need for regulation in the financial sector. However when some of the incidents were examined closely it was apparent that many of the worst offenders simply ignored existing regulations. In most cases, banking and financial regulations seldom stifle innovation. A hallmark of Fintech companies such as TransferGo is their transparency. Fintechs are not only developed on platforms that are built on compliance, but they also have the flexibility to incorporate regulatory changes easily and quickly.
Myth 4: Fintech is exclusively about lending and payments
While a large percentage of Fintech investments, about 80%, have been in the lending and payment arena, the future of Fintech covers the entire spectrum of financial services. Investment management, marketing provisioning and insurance are key areas of growth. The World Economic Forum recently reported that Fintechs involved in the insurance sector were revolutionising the previously moribund industry. Fintech’s ability to provide superior data analytics is another area that is attracting widespread interest.
Myth 5: Fintech technology is not secure
Industry analyst Simon Taylor says that this is simply not true and instead “takes a possibility and turns it into a probability”. While there is no doubt that any new technology opens up the possibility of cyber-attacks, Fintechs are by no more exposed to these threats than any other sector. The recent SWIFT attacks and some of the credit card data hacks in the US give ample evidence of how even long standing institutions have some vulnerability. Fintechs, including TransferGo are subject to the same FSA regulations as traditional financial service companies and in many cases employ security and identity checks which exceed the bare minimum. As companies founded on technology, security issues are addressed in every step of development rather than addressing threats and problems arising from add-on systems.