Big Tech companies all have one thing in common: they dislike staying in their own lanes. Recent years have seen will-they-won't-they discussions of whether big tech is looking to enter the financial services space. Even if it's unlikely that you'll ever deposit checks with the Bank of Google, Apple, or Amazon, it doesn't mean you won't use their branded services in future.
A recent study noted in Contemporary Economic Policy finds that the entry of Big Tech into the financial sector can result in increasing innovative financial services and also enhancing financial inclusion by making these services accessible to people who have historically been excluded from financial services provided by banks. "About one in three adults globally does not have a bank account. This makes them vulnerable, as they have limited possibilities to save during good times and rely on savings or credit during bad times,” according to Anneke Kosse, former Research Advisor at the Bank of Canada. Still, it is crucial that individuals possess the necessary information and abilities to appropriately use services provided by big tech. Thus, the implementation of financial education — which aims to advance people's financial expertise, knowledge, preferences, and attitudes — should be considered by the tech industry.
Apart from roles big tech companies play in the finance industry, how technology might continue to transform this market is also worth focusing on. “I see that innovation and the role of technology in transforming markets is both a risk to finance, as well as an opportunity,” states the Financial Conduct Authority’s chief data, information, and intelligence officer Jessica Rusu. To exemplify, the delivery of financial services using financial technology, often known as fintech or FinTech, offers customers individualized experiences through big data and AI and enhances customer retention through speed and convenience. The four essential areas of FinTech are big data, cloud computing, blockchain technology, and artificial intelligence. The use of smartphones for mobile banking, investing, and borrowing services is a representative example of technology seeking to increase accessibility of financial services to the general population.
While the forces of digital revolution contribute to growth in fintech, significant risks, such as cyber attacks continue to dwell in this field. Every 39 seconds, a new cyberattack occurs, and unfortunately, one of the most popular targets for hackers is the fintech industry. This is not a surprise as people manage digital money more frequently now and fintech companies have more sensitive data to secure than before. In one instance, the customer data of Pepperstone, a leading Australian brokerage, was stolen in August 2020. Certain amounts of data - registrants’ name, contact details including address, date of birth and security questions and answers that were chosen - were exposed. Although the company holds its hand up to this data leak, reassuring customers, cyber insecurity has once again alarmed people. Data and technology, when utilized effectively and responsibly, can provide consumers with faster, more efficient, and secure services that enable them to make informed decisions and protect their personal data. Otherwise, fintech will continue to face this key obstacle: security problems and low user privacy.