FinTech Explained

Financial Services were one of the sectors that most willingly embraced the use of technology. Notably in the “big bang” deregulation of the stock markets in 1986 which also saw the shift to screen-based electronic trading. The rate of change has only increased since then. Financial Technology, better known as FinTech, covers the use of mainly digital technology, to provide innovative financial services and solutions. It includes a wide range of activities, and applications that leverage technology to enhance and streamline various aspects of the financial industry, including banking, investing, payments, and insurance.

Companies involved in FinTech rely on digital platforms, software, and mobile apps to deliver their services. This digital transformation enables faster, more convenient, and often more cost-effective financial solutions. FinTech places an emphasis on providing user-friendly and customer-centric experiences. The goal is to simplify financial tasks, making them accessible to a broader audience, including those without extensive financial expertise. This means it has significantly increased accessibility to financial services, particularly for individuals and businesses in underserved or remote areas. It has also made financial services available to people who were previously excluded from the traditional banking system. FinTech has disrupted traditional financial institutions like banks and insurance companies by offering alternative, often more efficient solutions. This disruption is forcing traditional players to adapt and invest in the same technology.

One of the most prominent ways technology has influenced financial markets is through high-frequency trading (HFT). HFT involves the use of algorithms and powerful computing systems to execute trades at extremely high speeds, often in microseconds. This rapid trading has both positive and negative effects on financial markets HFT can increase market liquidity, making it easier for traders to buy and sell assets. However, HFT may also contribute to market volatility. Sudden price swings driven by algorithmic trading can create uncertainty and disrupt traditional trading strategies.

The financial industry has embraced big data and advanced analytics. With the ability to process and analyse vast amounts of data in real-time, financial institutions can make more informed decisions. This allows institutions to better assess and manage risks using data-driven models. Machine learning algorithms can identify potential market risks at an early stage. Predictive analytics can forecast market trends, helping investors make informed decisions about asset allocation and trading strategies.

As technology has reshaped financial markets, regulators have had to adapt to maintain market integrity and protect investors. Regulators have introduced rules to monitor and control algorithmic trading practices to prevent market manipulation and unfair advantages. With increased reliance on technology, cybersecurity has become a paramount concern. Regulatory bodies have imposed stricter standards to protect sensitive financial data.

FinTech has reshaped the financial industry by promoting competition, improving access to financial services, reducing costs, and fostering innovation. How do Terra Sales Solutions’ clients fit into this world. One of our key partnerships is with a world leader in time and frequency synchronization systems. Accurate time-stamping and reliable synchronisation of computer systems is a key success factor in financial applications and a necessity for being able to fulfil regulatory requirements. As the impact of Fintech continues to widen Terra will continue to work with partners old and new in this exciting and dynamic field. To learn more about Terra Sales Solutions and how we can work with you to achieve your international expansion goals in any part of the planet, book a conversation, and follow us on LinkedIn for the latest news from Terra Sales Solutions.