Real-time Control. Through the use of innovative technology, FinTech is providing consumers and small businesses more real-time control over their finances. FinTech offers consumers the ability to better manage their finances.

Leveling the Playing Field. FinTech is leveling the financial services playing field, providing services that were historically only available to the wealthy, to the masses. For example, whereas an investor previously needed a certain level of assets to qualify for portfolio management, the introduction of robo advisors is enabling a significantly larger portion of investors to enjoy a preferred level of portfolio management.

Consumer Benefits. Consumers can vastly improve their consumer financial services experience through the use of FinTech. (6) Faster approvals, more transparency, higher personalized service, and greater convenience are just some of the benefits of FinTech.

Regulatory Issues. The number of non-traditional financial services firms entering the FinTech space raises questions about how to effectively conduct regulatory and supervisory oversight. Due to the diversity of offerings in FinTech and the disparate industries it touches, it is difficult to formulate a single and comprehensive regulatory approach. (5)

Consumer Protection. FinTech can make use of nontraditional data to help evaluate consumers who lack credit history. However, some non-traditional data may not have a broadly agreed upon or empirically established nexus with creditworthiness and may be correlated with characteristics protected by fair lending laws, for example. (2)

Speed of Development. As stated by Governor Brainard, there is a tension between the lightning pace of development of new products and services being brought to market and the duty to ensure that important risks around financial services and payments are being addressed. (2)

FinTech providers use technology to disrupt existing financial services by offering consumers a more compelling offering such as enhanced capabilities, convenience, or lower prices and fees. (4) FinTech has attracted numerous firms and investors. According to CB Insights, there are over 40 Venture Capital-backed FinTech unicorns worth over $150 billion. (3) There are even FinTech stock indexes, such as the KBW Nasdaq Financial Technology Index. Although in its early stages, FinTech is already improving the consumers’ financial services experience and should continue to positively impact the financial services industry as FinTech matures.

Sources:

1. https://en.wikipedia.org/wiki/Financial_technology
2. https://www.consumercomplianceoutlook.org/2016/third-issue/perspectives-on-fintech-a-conversation-with-governor-lael-brainard/
3. https://builtin.com/fintech
4. file:///C:/Users/jgomes/Downloads/ey-global-fintech-adoption-index-2019.pdf
5. https://www.investopedia.com/terms/f/fintech.asp
6. https://www.fintech.finance/01-news/4-benefits-of-fintech/