A trending topic in the world of finance is the emergence of fintech. Fintech is a concept that is only just now being spoken about in Jamaica, but there is much confusion about what it is. The term is a relatively new one, and it’s really just a merging of two words you already know: “financial” and “technology”, and is used to describe the use of technology to deliver financial services and products to consumers.

The emergence of fintech partnerships

Who would have believed, 10 years ago, that somebody could open a bank account online without physically going in to a branch? And remember the now-ancient concept of a bank book? Now you can link your account to your smartphone or tablet and use it to monitor transactions. And from the ease and comfort of a poolside lounge chair, day or night, you can even transfer funds to a creditor’s account. You can also even, with a digital wallet accessed by your phone, use it to pay for things with money in your account. All without stepping foot into a bank and standing for hours in a long line, time nobody can afford these days.

Bank-fintech partnerships are increasingly becoming the norm today as a result of the convenience the latter provides for bank customers in preparation for a future that will more and more be driven by technology. Which is why banks, and other financial institutions too, have begun to redefine themselves as agile technology companies because they are coming quickly to the understanding that in this digital age, customer preferences and lifestyles have begun to change.

Recently, I was made aware of a Facebook post offering up righteous indignation about the branch of a certain bank having the temerity to tell its customers that the branch was now tellerless. But the reality is that the move to digital bank branches or fully paperless operations at financial institutions has been in train for a while, and so, making branches increasingly digital is now a common objective. It’s called ongoing digital transformation and, yes, it can be scary to contemplate. But that’s where it’s heading, or, as we say in Jamaica: A so di ting set. The pandemic is only spurring on these changes faster as the world starts to recalibrate and reset what consumer service will look like in the post-pandemic world.

The future of fintech

It is tempting to view banks and financial institutions as modern-day villains forcing their digital agendas on an unsuspecting public, but it’s probably instructive to understand that financial institutions themselves were initially wary of fintech companies, seeing them as competitors that were taking advantage of the void created by their industry which for a long time had been unable to keep up with rapid technological advancements.

But today, financial institutions have hit back, either partnering with fintech companies or leveraging the technologies in-house. For example, the NCB Financial Group in 2021 created its own start-up fintech company called TFOB (The Future of Business) in order to build out its Lynk payment platform, which is intended to act as a conduit not only for the Bank of Jamaica’s digital currency innovation, but also as the technological spine for a range of upcoming Lynk-branded projects. It’s all about increased efficiency.

Still, the emergence of fintech isn’t only limited to banks and other financial institutions. Other industries are seeing the benefits to fintech, as well. With advances in technology, stock exchanges, for example, are seeing consumers able to invest in the stock market over the Internet with little or no face-to-face interaction, by way of financial advice or what is commonly referred to as “robo advice”. And, in the insurance sector, a particularly exciting innovation is car insurance providers that are working towards short-term or pay-as-you-go policies based on “telematics-based” insurance in the future, where the customer’s car is monitored using data collected by way of their smartphone or a kind of black box installed in their car, which will determine how much they pay for insurance.

The bottom line

As with any system that involves getting the most bang for your dollar, for every benefit there will be a potential pitfall, with the most obvious ones being, in this case, financial exclusion and a shut-out of access for consumers who aren’t tech-savvy, and exposure to technology-based risks like cybercrime or identity theft.

But, with the rapid advancement of the Internet and the constantly improving capabilities of electronic devices, change in banking and financial services and other sectors has speeded up in recent years, bringing a reshaping of the financial services landscape that a few years ago would have been unimaginable. There is no turning back now.