What was the Question ?
If Fintech is the answer, are we sure we know what is the question? Fintech started off being about changes to the banking and investing back ends, but not any more. Fintech is now being used to describe new On-line banking and Investing systems, as well as, automated investing systems. For arguments sake, let us view Fintech, as any new technology in the Banking and Investing world.
Savings Passed On ?
With these new technology changes, the main thing will be, will savings realized by financial firms passed on? Some of the savings for financial firms are:
- Less employee overhead, which should mean significant savings. If there is less need for tellers, investment advisors, insurance advisors, etc., that will save these firms big money. Less salaries, less benefits to pay, no pensions, these savings could be the biggest Fintech improvement, but will I see savings?.
- Less Mortar & Brick locations, this is a follow on to all the on-line services. If Fintech means more services on-line, it could mean less need for as many “regional offices” and the like.
- Easier and cheaper transfers between banks and investing firms. These “costs” are hokum any how, but now even harder for the big banks to hide. All of this is comms between computers, no humans involved. Why does it cost $3 to make an Interac Transfer?
- Lower Fees for services like costs per trade and such. With on-line trading and banks this was a big promise, that has never really come to fruition (yet).
- Faster and better portfolio decisions sound like something that should happen, but that depends on how it is implemented, and faster is a relative statement (same day transactions can be faster than 2 or 3 days lead time, but are worse that within 5 minute trades).
- Consolidation of firms might happen in the U.S., but less likely in Canada. Canadians continue are at the mercy of the Big Banks, but maybe Fintech will cause small on-line banks to break through? We can only hope on that one.
Fintech For Everyone ?
Will I be able to take advantage of these great new technologies, or will this simply end up being something that benefits big investors and financial firms? I suspect there will be some advertised Fintech features offered, but my assumption is this will end up being a big money, people and time saver for the big financial firms, but not so much for John Q. Public.
Can I Create a Fintech Edge ?
Can I, as a relatively tech savvy investor, find my own Fintech edge? Not likely is my opinion. That would mean large financial firms would open up their systems to me and other programmers. This will not happen, security concerns would be the biggest issue.
All I can think of is Pink Floyd’s lyrics from Wish You Were Here,
“Welcome my son, welcome to the machine”