Can Fintech Be a Force for Good?

Can Fintech Be a Force for Good?

The vision is coming true now as internet businesses disrupt the financial industry and converge finance and technology. Their encouragement? Economic sectors that are quicker, less expensive, and easier to get.

Fintech can be both a force for good and harm, but it also can be both. However, despite the excitement around blockchain, cryptocurrencies, and non-fungible tokens, the idea of fintech remains to be seen.

Technology-enabled financial services are at the heart of fintech. More data is now available because of the internet of things, but it has also created a need for new techniques for gathering, storing, processing, and analysing uncharted data. Data collection, data management, data analytics, and computing architecture are the four primary areas where technology enables finance.

In truth, these technologies are familiar to a large number of individuals. Service providers may get to know their clients better or perform due diligence on an unprecedented scale thanks to AI and machine learning, which analyse enormous amounts of data. The scalability, adaptability, and speed necessary to manage massive amounts of data have been made possible at the architectural level by quantum and cloud computing.

As a prelude to cryptocurrencies and NFTs, we have seen how blockchain has altered how data is collected and authorised. While this is happening, there are several possibilities in specialised roles, like designing APIs to allow various apps to communicate and cybersecurity to protect the finance ecosystem.

These technologies have altered financial services, including payment, credit, investment, and insurance. It is possible to assess and process applications for loans and insurance more rapidly, for instance. In addition, high-frequency trading and AI portfolio management technologies simplify trading for investors. Indeed, the concept of money itself is being questioned in light of the rise of cryptocurrencies.

Financial services like banking and insurance have historically been carefully regulated to ensure that service providers adhere to legal requirements and ethical behaviour. Although technology has significantly altered how these services are delivered, finance basics have remained the same.

The fintech industry, however, is being rapidly advanced by digital businesses, which often operate in less controlled contexts. Because of this, regulatory gaps need to be closed due to the arrival of digital companies into an area that has historically been heavily controlled. As a result, regulation advances more slowly than technology advancements. For instance, the decentralisation of data governance, authentication, and protection are one of the goals of blockchain technology. Therefore, it cannot be closed down by the government, unlike a bank.

Although blockchain proponents maintain that the technology's distributed nature makes hacking impossible, bitcoins are stolen every day. In addition, implementing digital currency by central banks might give governments unprecedented power and surveillance capabilities by providing them access to large amounts of data. In the end, the benefits of technology reflect not just on their creation but also live characters and governance.

Positively, governments require banking licences from mobile banking service providers, which has resulted in some regulatory convergence. The Basel Committee for Banking Supervision is also crucial in establishing worldwide guidelines and standards for cryptocurrencies.