Future of Fintech. A Combination of Barbarella & 2001: A Space Odyssey

29.09.2015
Written by Spiros Margaris / This article is part of the ‘Think Further’ series sponsored by Fred Alger Management. For more ‘Think Further’ content, please visit www.thinkfurtheralger.com / Published also in Medium.

When I was invited by the Fred Alger Management to participate in their creative program called ‘Think Further’, I felt very honored and at the same time challenged.

To predict the future of the financial technology (Fintech) industry, I was wondering how to do justice to an industry that quickly adapts, develops and has such a disruptive impact on the financial sector.

For any readers who are not familiar with Fintechs, I like to provide a simple definition. Fintechs are mostly startup companies who want to change the banking experience and the financial industry through innovations and technology. In the process, they hope to make the financial sector more accessible, less expensive, and simpler.

I firmly believe that Fintechs will change the financial industry the way another innovative disruptor, Amazon, changed the business model of many retailers forever.

The hottest areas in Fintech, according to a recent report by Accenture and the Partnership Fund for New York City (released in June 2015), are payments, lending, trading technologies, and wealth management. The significant interest generated in these areas, along with billions of dollars in investments by banks, insurers, venture capitalists, and tech giants further fuels the explosive growth of the Fintech industry.

Everything in Fintech is still up for grabs and trends, interests, and emphasis will continue to change as customer and industry demands change. 

If I had to pick what disruptive financial technology will impact a multitude of fields in the next 5 – 10 years, I would emphasize two: blockchain technology and cognitive computing.

My first prediction: Blockchain Technology

I want to start my predictions by talking about blockchain technology because it already has a huge disruptive influence and impact on innovations in Fintech, financial services, and non-financial markets. 

Many financial incumbents are putting enormous amounts of money and research behind blockchain technology to develop commercial applications.

They all see tremendous savings and earnings potential by eliminating the need for a “trusted middleman” as the technology can provide a public ledger of transactions.

Although most incumbents feel strongly about blockchain technology, it is not yet known what applications and uses will emerge that will finally change the financial industry status quo. I want to stress that financial institutions are still at the beginning of making blockchain technology work for them in the real world. Some of the key challenges and risks are the computing power needed, energy to support the system, regulation, and reliability.

Those obstacles will eventually be overcome through experimentation combined with collaboration by all market participants. More of the latter will increase the chances of making blockchain technology a reality with a tremendous real world impact beyond what we can imagine today.

My second prediction: Cognitive computing

Cognitive computing combines artificial intelligence (AI) with new advancements in machine learning algorithms that mimic the human brain. It allows computers to accumulate expertise, experience, and knowledge in order to participate in the decision-making process and understand and react to natural language. I believe that cognitive computing will have an enormous and far-reaching impact on the financial industry. 

AI applications are successfully used today by many fields including finance, health care, science, and retail. In finance, for instance, AI is already used in cost savings, reporting, and reducing risk. However, cognitive computing will take AI to the next level.

The Fintech firm who masters the potential of cognitive computing first will have an enormous advantage over their direct competitors, financial incumbents, and tech giants.

Cognitive computing will change and have a massive impact in every aspect of business and finance. We only have scratched the surface of what cognitive computing capabilities are yet to come.

Both blockchain technology and cognitive computing will help unleash the true potential of the Fintech disruptive revolution. Their influence and impact will be felt during and beyond the next ten years.

Whenever I am at the wefox Group headquarter in Berlin — or in any of their European offices — I feel the energy and passion of everyone present to give their all to make a difference and change how the insurance industry is perceived and experienced. Their success is very much based on their inspiring company culture that emphasizes the personal growth of each team member. Julian Teicke and the great management team spend a lot of their time thinking about how to maintain a personal growth culture for their employees. 

The wefox Group executives are always aware and make their highest priority the nurturing of a personal growth culture in a diverse and inclusive working environment. The goal is to keep great people with the company and attract their friends and other people of different backgrounds, experiences and mindsets. The people wefox Group wants to attract have something very important in common: they want to make a true difference in their lives and for the company they invest so much passion and precious time in.

I still have a vivid memory of the fireside chat Julian and I had at the Money20/20 Europe conference in Amsterdam this June. When I looked at him as he spoke about wefox Group and its strategy and vision to grow, I saw his bright eyes, face and body telling everything there was to know about leading a successful startup. His deep passion takes you — team, investors, customers and listeners — into believing in the wefox growth journey and in the many exciting future insurtech solutions still to come. It was not only what he said that inspired but also how his enthusiasm was so contagious that I am certain most people in the fireside chat audience want to be part of the wefox story.

So, the wefox successful funding round reflects the achievements of delivering great insurtech offerings and executing on its strategy and is another strong sign that the insurtech industry is here to stay and prosper. The series B funding announcement is a piece of the puzzle that one day will give us all a clearer and bigger picture of wefox Group’s journey. It is the journey, not the destination that matters, and wefox is here for a long great journey.

I want to finish my article thought inspired by the quotation, “I love you more than yesterday, but less than tomorrow.” I believe my closing statement reflects the wefox Group leadership and team’s deep commitment and promise to all of us.