The so-called Fourth Industrial Revolution is here. One of its consequences is the emergence of technology companies called fintech that rely on various technologies to offer services and products that were previously offered almost exclusively by financial companies such as banks, insurance and others of the same area.
This is highlighted by engineer Miguel León, co-founder the Venezuelan mobile payment platform Vippo and member of the Asociación Fintech Venezuela, who adds that the first question that arises is related to identifying the technologies used by fintech. “Actually, there are many, but the main ones are Big Data, Artificial Intelligence, Blockchain, Internet of Things (IoT) and the mobility provided by the new cellular networks, especially based on 4G and 5G technologies,” he says.
A second question refers to the different types of fintech. León stresses that, according to CB Insights, a specialized publication on the subject, there are ten categories (Loans, Blockchain and Cryptos, Regulations, Personal Finance, Payments and Invoices, Insurance, Capital Markets, Patrimonial Management, Transfers and Remittances, Mortgage and Real State):
What makes them so special?
“As mentioned earlier, we are already in the Fourth Industrial Revolution which, unlike the previous ones, focuses on the individual, who has become a more demanding customer who looks not only for a good product, but values experience. And this is where the fintech give the battle to more traditional companies,” says Leon.
On the one hand, fintech are smaller and more agile organizations. In fact, the latter is one of its vital characteristics, in which innovation and learning are everyday routines. On the other hand, the interviewee continues saying that those who make them up are aware of the latest technologies and their applications. According to León, two fintechs have experienced a boom: insurtech and regtech.
Banking and regulations sector
The insurtech are the finance technology companies that have chosen insurance to develope their actions. The activity of these companies has always depended on the collection and analysis of many data for performing actuarial studies and setting risks, among other things. The insurtech are introducing the Internet of Things through wearables – devices such as clocks that constantly monitor our activity and signs such as pulse, temperature, blood glucose level – to determine the quality of risk that a given individual represents, and time to secure it. Likewise, and using Big Data and Artificial Intelligence, it is possible for insurtech companies to submit quotes and attend claims in a few minutes. The impact is such that The Economist included an article in its July 20 edition of this year entitled “The Future of Insurance is happening without Insurance Companies.”
Regulation in the financial sector is the newer area in which fintech are playing an increasingly key role. Thanks to the regtech tasks that are becoming more complex every day, such as meeting the increasing requirements of regulatory authorities, are carried out with the required speed and at reasonable costs. These companies have also introduced innovative mechanisms for customer credit evaluation, such as the analysis of their activity in social networks. With the use of blockchain technology and smart contracts that allow for unimaginable security and transaction speed. The final effect expected is to avoid financial crises such as that of 2008, whith an important deficiency on the regulatory field.
The interviewee refers to the following links as sources of information: Insurtech: Insurtech: www.gohealth.com, www.hioscar.com, www.lemonade.com RegTech: www.cmeregreporting.com, www.abside-tech.com/regtech/.
M.Pino
