What is Fintech?

People often wonder what’s Fintech and what is driving this trend? Basically, Fintech is a way to digitalize the banking and financial industrial as a whole. Especially due to compliance and legal, government regulation, infrastructure and bureaucratic process as a whole. The financial industry is a dinosaur moving slower than an elephant.

Thus all the disruptive technology has done for robotic, AI, machine learning, and the neural network is a force to change the financial industry.

What are the advantages?

The pattern recognization

As an economist, they are training to read indicators and see patterns using excel sheet, the technology already able to take it to another level using machine learning.

Mobile Payment

Obviously based on the trust the online transaction has gained in the recent year, compared to its early age. the mobile payment system with the fingerprint reader and iris scanner is the best method for transaction since almost everyone has one now. The government like India who abolishes the dollar bill also welcome the electronic form of payment due to the corruption and for tax tracking purpose*.

A BLINDFOLDED monkey throwing darts at a newspaper’s financial pages,” wrote Burton Malkiel in “A Random Walk Down Wall Street”, his 1973 bestseller.

It is just fitting that the world’s largest fund manager who manage a lot of index ETF fund just fired many of its stock portfolio managers **. In a world of numbers, with monkey and homo sapiens I would rather trust the machine with data sets and patterns than just human intuition and behavior psychology. At least when the machine is wrong, I will know what went wrong and tweak it with different factors into its algorithm. Not all portfolio managers can beat the market like Dr. Edward O. Thorp **

If muscle memory takes a lot of practices to make a human 80% good at something, then AI machines who self-correct will always be better than us 90% of the time.  The missing 10% AI unable to do better than us is the internet timeout and factors those are not in their learning pattern.

Lastly, Fintech is not really about the financial industry. it’s about the movement of disruptive force. There is always a next BIGLY term and trend people are seeking, but after all the methodology and principles are the same.


**Financial Times

***Edward O. Thorp