FinTech Effect on the Global Economy

FinTech Response to 2008 Financial Crisis is Reshaping the Global Economy and its Workforce

Unlocking the Potential

The Fintech response to 2008 financial crisis has been playing a role in reshaping the global economy and its workforce. If we look at the Fintech evolution we notice how the introduction of the telegraph was the first milestone at that time in providing the infrastructure for financial globalisation. Today people can open bank accounts online and transfer money to each other from their mobiles devices. The Bitcoin cryptocurrency was introduced in 2009 followed by mobile wallets in 2011. Those two changes that seem to be the second milestone 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 great untapped potential from the unbanked to include them in the financial system that would result eventually in more cross-border trade. However, banks and Fintech firms’ initiatives through mobile banking and payment technology have resulted in significant improvements in this space at different countries. These breakthroughs will gradually increase e-commerce and will pump additional money into the global economy that still lacks resilience after eight years. picture1

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 to generate immutable digital records with more speed and at less cost, such as transactions, agreements, contracts, and ownership.  Several industries are embracing cross-pollinating this compelling and simple technology, aiming at improving and streamlining the processes. Healthcare, for example, started to explore how Blockchain can benefit population health, medical records, and patient-generated data. Eliminating middleman to access information can increase data security and remove the cost. Dr 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 in the world, can use Blockchain to create smart farms and track food source and prices. picture1

Reshaping the Global Workforce and Business

The Fintech revolution has enabled banks to eliminate jobs because customers’ visits to physical branches became less with mobile banking services. Blockchain possible use cases at banks have the potential to eliminate many back office jobs in future. The robo-advisors, once become successful, could eliminate jobs from investment banking. In parallel, technology firms are going through deconstruction. Many companies are subscribing to “super cloud” services that manage hardware, software, network, and database, which eliminate the need for technology workers to manage different technology layers. Some technology companies are creating new positions to concentrate on Blockchain innovations. The retail industry has announced remarkable job cuts in 2016 at physical stores partly due to e-commerce increase.  This wave of changes is a considerable shift in workforce allocation, from or within those sectors. We should not forget how Fintech also played a role in growing car booking services which are another workforce shift. The same may happen in other industries as well and does not necessarily affect workforce only, but the way companies operate in future.  The Fintech energy and cross-pollinating ideas are driving change at many aspects in the business world and on peoples’ lives. picture1

Banks are quickly approaching their "automation tipping point

Which Banking Jobs Could be Automated?

Retail Banking, Operations, IT, Investment banking, are among the areas that could be automated. The benefit for banks is the potential for streamlined processes, reduced staff, and increase in accuracy. However, there are challenges to automating customer service for example. Flexibility, judgment, and common sense cannot be achieved in automation. In addition, some customers get frustrated with standard scripts when dealing with phone centres.  Other high net worth individuals prefer to deal with dedicated advisors. Banks may not automate at the same time, but rather may follow the trend and data.  If other banks are automating, customers are getting engaged, growth and profits persist, while staying away from fraud and hacking, then automation may win. For the foreseeable future, there are areas that will need human interaction, and technology will need people to manage it picture1

CFA Institute FinTech Survey Report

Regulators around the world will keep on playing an important role in managing Fintech innovations in a way that protect consumers, promote growth and efficiency. New technologies and data management may drive people to learn more about them, to catch up, keep their jobs or look for better ones. The social media, especially the professional one, and education institutions, would help to address the effects of the workforce shifts.  

Meet the Author

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Maher Jarjour gained his banking and payment industry expertise at Citibank and American Express. He later attended industry events on Payments and Blockchain and expanded his experience to the retail industry. Maher is providing his opinion among the evolvements in the Payments space.