While many in the financial services mainstream view the FinTech disruptors as the cowboys of the industry, a careful assessment of the practices behind these new tech-based firms suggest ethical models which may have as large an impact on global financial services as their technological innovations. FinTech disruptors are, many times, new start-up financial services agencies that offer a single or small group of services updated by a new technology. By focusing on a single process or technology, the disruptors are taking small bites of the pie. The strength of this model is supported by the rapid growth of the sharing economy, with decentralised asset management.
Theoretical models of the newly-evolving financial services sector suggest collaboration and long-term growth is more sustainable than competition and short-term profit. By combining these models with public accountability and transparency and shared-asset models, disruptors are focusing on new crowdfunding models, including cryptocurrency and equity ownership models, using blockchain, for investment and capital. Money management startups are using cloud-based software as system (SaaS). SaaS models of software and data management as a utility means the large capital expense models of hardware, software, and IT departments are going to become obsolete.
Big data and machine learning platforms will hopefully improve regulatory compliance, and concerns over cross-border data and information security can be managed, along with concerns over cyber-security within systems.
Agility- the ability to respond quickly to significant changes in systems and processes- is an attribute that belongs to the small and hyper-focused FinTech disruptors. Economies need to be diverse to be strong. Traditional financial services providers followed this model, with more profitable sectors subsidising those services that were less profitable, but important, such as programs to foster inclusion of women and youth. But the new sharing economy model, with decentralised asset ownership, new models for investment and raising capital, such as alternate global crowdfunding, and a focus on transparency and accountability, aided by blockchain and other technologies, may move financial services to a collaborative, decentralised series of processes and products, informed by consumer needs and able to respond rapidly to changing technology.
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