INTRODUCTION

A vast majority of young people are beneficiaries of a scheme that has financed their aspirations, and vanities – this scheme ‘Fintech’. The ease of this credit 'eh' comes next to none. Like the song ‘if I no get money I get place to borrow’[1], I dare add ‘and quickly too.’ This part of the series is dedicated to showing the comparative advantage of Fintechs over traditional banking modules.

Historically, Fintechs have been with us a while and provide a necessary alternative/supplements to traditional finance methods. The oldest examples can be traced to the 1800’s with the introduction of the First Transcontinental Telegraph. Western Union was introduced immediately after in 1871 and a more recent example will be in 1967 when Barclays introduced the first ATM machine.

The rise in technological advancement has seen a surge in the creation of Fintech firms. In these days, almost any financial transaction can be concluded on your mobile device. The most important elements in this regard would seem to be data and battery time. A 2016 statistics show that over 2.1 billion people have a smartphone with the number expected to have risen to around 2.7 billion in 2019.[2] (Note: These statistics exclude those with access to other communication devices as laptops).

The internet has also aided the rise of Fintechs by proving to be a veritable tool for its development. Our phones and other mobile devices can in an instant access data from foreign lands with the use of the internet.

The Global Financial Crisis left a lot of havoc in its wake. In the US alone it is estimated that about 9 million workers lost their jobs, many of whom worked financial services. A lot of tech-inclined graduates needed to put their craft to use since jobs were not forthcoming. They therefore turned to Fintech as a means to an end. A lot is also hinged on the disenchantment by customers and the perceived indifference of the traditional banking institutions during the wake of the financial crisis coupled with increased and stringent regulations by regulatory bodies in the aftermath. In response to the crisis, finance service institutions were forced to rethink the ease of credit access. There was also a great distrust of banks by customers who lost their investments in these banks during the crash. The newly registered trademark can be found in the Register of Trademarks and lasts for an initial period of seven years but same can be renewed by the proprietor/applicant.

Fintechs on the other hand are characterized mainly by their ease of access to credit. With the push of a button, you can access credit effortlessly and with little security/scrutiny. It is no wonder banks and other financial institutions have begun incorporating technological services in their business. In 2016 alone JPMorgan is reputed to have spent $9.5 billion on finance technology, and this amount is set to grow in coming times.[3]

Another comparative advantage over traditional financial institutions is the fact that there is a myriad of options for Fintech customers. For example, for banks the lending criteria is for the most parts the same across board, more like a one size fits all approach to lending;[4] for Fntechs, the companies are necessarily in competition with one another, so the services are usually tailored to fit their audience. Fintechs desirous of having market share would have to price their services better. That is to say, I can get a company that offers me a loan with an interest rate of 5% and another that decides to lower it to 3%. This is all in a bid to acquire market share.

The ease of accessibility of Fintech credit has led to the promulgation of several legislations. This previously deregulated aspect of finance is increasingly in the eye of the storm and for good cause too. Customers and society have to be protected from the activities of greedy and fraudulent people who will otherwise take advantage of this lack of regulation.

This work in due course is set to probe the extent of regulation of the Fintech industry by available legislation and regulatory agencies. This part is intended to stimulate the reader’s interest in this discourse.

Did I miss anything?

Feel free to ask questions or make comments in the comment section. I’d be happy to oblige.