The fintech revolution - Reshaping the global economy and its workforce
The fintech response to the 2008 financial crisis has played a role in reshaping the global economy and its workforce. But how? Here are some points to note.
Unlocking the potential
The fintech response to the 2008 financial crisis has played a role in reshaping the global economy and its workforce. Reviewing the fintech evolution, we recognize the introduction of the telegraph as a first milestone because, in its time, the telegraph provided an infrastructure for financial globalization. Today people can open bank accounts online and transfer money to each other using their mobile devices. The Bitcoin cryptocurrency was introduced in 2009 followed by mobile wallets in 2011. These changes identify a second milestone and were triggered after banks incurred considerable losses due to the financial crisis.
Through mobile payment technology, banks have been trying to capture new customers and retain the existing ones while reducing costs. In addition, there was the great untapped potential of the unbanked to include them in the financial system which would eventually result in additional cross-border trade. However, banks and fintech firms’ initiatives through mobile banking and payment technology, have resulted in significant improvements in this space in different countries. These breakthroughs will gradually increase e-commerce and pump additional money into the global economy which, eight years later, is still not resilient.
Blockchain and cross pollination
The emergence of blockchain that underpins Bitcoin is gaining momentum in paving the way to change business models around the world. The energy and venture capital spent on developing Blockchain as use cases for financial institutions, have shed light on this technology. It enables users to generate immutable digital records, such as transactions, agreements, contracts, or ownership, with more speed and at lower cost.
Several industries are embracing cross-pollination of this compelling and simple technology, aimed at improving and streamlining the process. For example, healthcare started to explore how Blockchain could benefit data from population health, medical records, and from other patient-generated areas. Eliminating the middleman to access information can increase data security and reduce the cost. Doctor visits, heartbeat, Glucose, and IOT devices can be polled and stored using the health bank Blockchain. Supply Chain is another major industry that can use Blockchain to enable more secure and transparent monitoring of transactions. Agriculture, a leading job provider throughout the world, can use Blockchain to create smart farms and track food sources and prices.
Reshaping the global workforce and business
The Fintech revolution has enabled banks to eliminate jobs. This is because customer visits to physical branches were reduced due to mobile banking services. Blockchain possible use cases at banks have the potential to also eliminate back-office jobs. After Robo-advisors become successful, jobs could be eliminated from investment banking. In parallel, technology firms are going through deconstruction. Many companies are subscribing to “super cloud” services that manage hardware, software, the network, and databases. This eliminates the need for technology workers to manage various technology layers, however some companies are creating new positions focused on Blockchain innovations.
The retail industry has announced major job cuts in 2016 at physical stores partly due to increases in e-commerce. This wave of change is a considerable shift in workforce allocation within those sectors. We should not forget how fintech also played a role in growing car booking services causing another workforce shift. Reserving cars when traveling, ride-sharing, independent chauffeurs, and the like, have greatly increased due to technology. The same may happen in other industries and does not necessarily affect only the workforce but also the way companies operate in future. As seen above, the fintech energy and cross-pollinating ideas are driving change to many aspects in the business world and people's’ lives. For example, banks are quickly approaching their 'automation tipping point'.
Which banking jobs could be automated?
Retail and Investment banking, Operations, and IT are among the areas that could be automated. The benefit for banks is the potential for streamlined processes, reduced staff, and increased accuracy. However, there are challenges to automating customer service. Flexibility, judgment, and common sense cannot be achieved in automation. In addition, some customers may get frustrated with standard scripts when dealing with phone centers.
Other high net worth individuals prefer to deal with dedicated advisors. Also, banks may not automate at the same time, but rather follow the trend and data. If other banks are automating with customers becoming engaged, growth and profits persisting, all the while staying away from fraud and hacking, then automation may win. For the foreseeable future, there are areas that will need human interaction, so people will need to continue being involved.
New technologies and data management may drive people to learn more about them, to catch up, to keep their jobs, or to look for better ones. Social media, especially professionally developed, along with educational institutions, could help to address the effects of the shift in the workforce. Regulators around the world will continue playing an important role in managing fintech innovations. This must be accomplished in a way that protects consumers, promotes growth, and results in efficiency.