Guide to the new language of tech and finance
In his 2011 article, Why Software is Eating the World, Marc Andreessen wrote:
“Six decades into the computer revolution, four decades since the invention of the microprocessor, and two decades into the rise of the modern Internet, all of the technology required to transform industries through software finally works and can be widely delivered at global scale.”
As we approach the end of the second decade of the 21st century, software and the technology it weaves together is well on the way to transforming virtually every aspect of financial services – from the products and tools we use to pay, save and invest, to the underlying business models of the financial system, and even to the very concept of money itself.
A new terminology has arisen to capture the technological disruption that is underway in finance. A prime example is the term Fintech which, along with related neologisms such as Wealthtech, Insurtech, Paytech and Regtech, have emerged to represent not only the online discussion of disruptions and innovations in financial services, but also the new businesses embodying this digital transformation and the ecosystem/community in which they operate.
While one can find references to Fintech dating back to 1972, common use and awareness of the term, measured by the volume of Google searches, began to take off around 2015. This interest in Fintech corresponded with the rise of social networks as self-organizing communities of interest, particularly Twitter with its original 140 character message limit (the hashtag #Fintech has only 8 characters instead of the 20 characters of #financialtechnology, making it very efficient way to tag and reference this content).
Nowadays, these neologisms have become key terms in segmenting and understanding how technology is reinventing a wide variety of business models and markets. And the online communities that are growing and self-organizing around these terms can offer valuable insight into these rapidly changing spaces.
If you’re unfamiliar with these terms, we have compiled the following definitions and descriptions and highlighted their key online influencers to help you keep up to speed on the latest digital innovations in financial services.
Fintech: Finance + Technology
Without a doubt, the most prominent new term in the finance landscape is Fintech. This is a broad concept applied to a wide range of financial technologies that are changing the face of the financial industry. Fintech is generally used as an umbrella term that encompasses all other terms related to the technological innovation of other financial businesses, such as Insurtech, Wealthtech, Paytech, etc.
Fintech can be defined as “businesses that leverage new technology to create new and better financial services for both consumers and businesses. It includes companies of all kinds that may operate in personal financial management, insurance, payment, asset management, etc.” (HuffPost, What is Fintech)
While there are many thousands of new startups globally that are bringing new thinking to financial services, the Fintech mindset of reducing friction, improving customer experience and evolving business models is informing discussions within many incumbent financial businesses. These discussions encompass a wide range of technological innovation with applications in finance, such as blockchain and distributed ledger technologies, cryptocurrency, artificial intelligence and machine learning, mobile and software-as-a-service solutions, data analytics and the internet of things, just to mention a few.
To stay current with online discussions about Fintech in various financial sectors, follow and engage with these top influencers:
- Brett King | @BrettKing | LinkedIn | New York
- Chris Skinner | @Chris_Skinner | LinkedIn | London
- Efi Pylarinou | @efipm | LinkedIn | Switzerland
- Ghela Boskovitch | @GhelaBoskovich | LinkedIn | London
- Jim Marous | @JimMarous | LinkedIn | Cleveland
- Scarlett Sieber | @scarlettsieber | LinkedIn | New York
- Theo Lau | @psb_dc | LinkedIn | Washington
- Fintech influencers to follow in 2019
- Top 100 Women in Fintech
- Follow the latest Fintech discussions on Twitter and/or LinkedIn
Wealthtech: Wealth + Technology
Similar to the way Fintech seeks to improve how we spend, receive and organize money, Wealthtech “unites wealth and technology with the goal of providing digital solutions to enhance personal (and professional) wealth management and investing,” says Marguerita Cheng in The Future of Wealthtech.
While the most familiar examples are robo-advisors, the term Wealthtech applies to any technology that automates, augments or otherwise enhances the management of investment portfolios, delivery of advice or the management and performance of human advisors. It may also include technology that improves the scale of custody, trading and back office functions in the broader capital markets.
How wealth management and advisory firms integrate emerging technology into their offerings will be a critical issue driving growth, scalability and profitability in the coming decade. Check out Xtiva’s Wealthtech Trends to Watch in 2019 in which we present insights from top industry experts about the road ahead.
To stay current with online discussions about Wealthtech developments around the world, follow and engage with these top influencers:
- April Rudin |@TheRudinGroup | LinkedIn | New York
- Craig Iskowitz | @CraigIskowitz | LinkedIn | New Jersey
- Helene Li | @helene_wpli | LinkedIn | Hong Kong, Singapore
- Jeff Marsden | @Jeff_Marsden | LinkedIn | Toronto
- Lex Sokolin | @LexSokolin | LinkedIn | London
- Michael Kitces | @MichaelKitces | LinkedIn | Washington
- Urs Bolt | @UrsBolt | LinkedIn | Switzerland
- Top People to Follow in Financial Services
- Follow the latest Wealthtech discussions Twitter
- Wealthtech Club, by INSART
Insurtech: Insurance + Technology
Insurtech refers to technological innovations being applied to the insurance sector that are disruptive of current business models and ways of doing business in the industry.
One type of innovation is captured by Tanguy Catlin in this McKinsey article: “Insurtechs are technology-led companies that enter the insurance sector, taking advantage of new technologies to provide coverage to a more digitally savvy customer base.” Top Insurtech influencer Matteo Carbone has written an excellent article comparing the performance of three consumer-facing insurance startups: Lemonade, Metromile, and Root.
Insurtech is also being applied by incumbents to innovate within their existing insurance operations, including:
- Internal workflow automation with machine learning;
- Big Data tools to improve underwriting accuracy;
- AI and machine learning to automate claim processing;
- Internet-of-things and telematics to personalize products and pricing;
- Chatbots for virtual agent interactions with customers; and
- Disruption of reinsurance operations through blockchain implementation.
To stay current with online discussions about Insurtech developments around the world, follow and engage with these top influencers:
- Bill Sullivan | @WFSULLIVAN3 | LinkedIn | Wyndham, VA
- Danielle Guzman | @guzmand | LinkedIn | New York
- Florian Graillot | @FGraillot | LinkedIn | Paris
- Matteo Carbone | @MCins_ | LinkedIn | New York
- Nigel Walsh | @nigelwalsh | LinkedIn | London
- Sabine VanderLinden | @SabineVdL | LinkedIn | London
- Spiros Margaris | @SpirosMargaris | LinkedIn | Switzerland
- The 50 insurtech influencers to follow online
- 11 Disruptive Ideas to Transform Traditional Insurance
- Latest Twitter discussion on Insurtech and on LinkedIn
RegTech: Regulation + Technology
Regtech is a term that denotes the application of technology to the management of regulatory processes. Regtech solutions are aimed at helping regulated sectors, such as the financial services industry, to more quickly adapt to new regulatory requirements through technology – essentially turning regulatory compliance into a market advantage. The challenge of enabling organizations to meet regulatory compliance across multiple markets/jurisdiction is one of the key opportunities for RegTech in global financial service firms.
According to Luz Fernández, in this BBVA article, Regtech is “paving the way for a new wave of startups that, leveraging technologies such as cloud computing or big data, are looking to save banks a lot of the time and resources they devote to ensure regulatory compliance.”
Regtech solutions are emerging to automate and optimize the following regulatory and compliance requirements:
- Anti-money laundering (AML)
- Anti-fraud monitoring
- Know your customer (KYC)
- Data security and privacy
- Mandatory compliance reporting
Follow and engage with these top influencers to stay current with online discussions about Regtech developments around the world:
- Conor Coughlan | @capital_finserv | LinkedIn | Washington
- David Bundi | @DavidBundiRisk | LinkedIn | Switzerland
- Joann Barefoot | @joannbarefoot | LinkedIn |Washington
- Lucy Heavens | @heavens_lucy | LinkedIn | London
- Sebastien Meunier | @sbmeunier | LinkedIn | New York
Additional Regtech resources:
- Deloitte’s global listing of the Regtech Universe
- 10 keys to understand what Regtech is all about
- Latest Regtech discussions on Twitter and/or LinkedIn
PayTech: Payments + Technology
Tech innovation in the payments space has been happening for much of the past two decades and was often referred by the Fintech moniker. In more recent years, the term Paytech is increasingly used to reference these developments.
Paytech includes a wide range of payment innovations, including the following:
- increased use of cryptocurrencies for value storage and payments (eg., Bitcoin);
- automation and reduced friction surrounding payments in many business settings (eg., Uber);
- alternatives to high-margin FX exchange and global funds transfer (eg., Transferwise); and
- increased mobile payments and integration of payments into messaging platforms.
Payments innovation can have significant impacts on existing business models and financial ecosystems, as Uber has demonstrated in the ride sharing space and Transferwise has demonstrated in FX and funds transfer. In both these examples, payments shifted from a tactical enabler to a strategic underpinning of the entire business.
Follow and engage with these top influencers to stay current with online discussions about Paytech developments around the world:
- Alex Jimenez | @RAlexJimenez | LinkedIn | Salt Lake City
- Karen Webster | @karenmpd | LinkedIn | Boston
- Will Hernandez | @W_Hernandez16 | LinkedIn | New York
- Ron Shevlin | @rshevlin | LinkedIn | Boston
- Patty Hewitt | @PaymentGal | LinkedIn | Savannah, GA
Additional Paytech resources:
With technological innovation accelerating in a variety of financial services sectors, online communities of interest are self-organizing and becoming important channels for keeping up with market developments. These global social networks of thought leaders, business leaders, journalists, academics and influencers are conducting a vast conversation – distilling overwhelming quantities of information that is available online, debating the meaning of market successes and failures, then refining business models in real time.
As we approach 2020, anyone working in the finance industry with intentions to be vitally engaged in the industry for at least the next decade ought to be tuning into this conversation and connecting professionally with others driving Fintech innovation around the world.