What’s the difference between FinTech and Finance?
FinTech is one of the hottest areas of finance. For those who might not know, we have seen a tremendous amount of job growth, venture capital investment and actual innovation in FinTech. The chart below shows the trend of job postings for FinTech. As you can see FinTech jobs are a clear case of hyper-growth right now (end of 2016).
I have been trying to understand what is FinTech and what will it be. In an earlier version of this article I made a generalization. I looked at all successful companies and I saw a common theme. They all have made a huge investment in technology, and have made technology a core competency. Every successful company in finance, I thought, was already a technology company. Great Finance firms have always been FinTech firms I thought. I presumed that there is no difference between well-done-Finance and FinTech, and that FinTech was just a made up word, a marketer’s word. But I was wrong.
What’s a real FinTech company?
A real FinTech company is one where from start to finish every aspect of the revenue generating part of the company is technology-driven. That’s why even though Bank of America has a bigger credit operation, Amazon is a FinTech company and Bank of America is not. If you really go inside the working of some large finance companies, you will still find technology to be a side show. Core decisions and core revenue generating areas are often kept away from technology and data-science, for a multitude of reasons. These companies are not FinTech (today). These are the ones that are most vulnerable in the huge disruption that is happening due to A.I. and FinTech.
Every Hedge Fund will be a FinTech Fund
Gone are the days where trading was about intuition, risk taking was about a quarterback-like aptitude to stay calm and level headed in clutch scenarios. In the following rather meaty presentation, mansi singhal talks about why all investment funds, hedge funds, mutual funds, robo-advisors are moving from a mindset of finding “star traders” to building complex complete trading systems. [ Reference research report : Nobody wants traders ]
