The FinTech Revolution: Winners, Losers, and the Future of Finance

The financial world is currently undergoing one of the most transformative periods in its history, driven by the FinTech revolution. This upheaval will produce winners and losers, with significant consequences for financial centres like Hong Kong and those working in the financial industry. The bankers of the future will possess distinctly different personalities, backgrounds, and skill sets than their predecessors.

FinTech, an abbreviation for financial technology, refers to the innovative application of technology in designing and delivering financial services. It has brought about considerable changes in the banking industry, with the emergence of artificial intelligence, peer-to-peer lending, big data, blockchain, crowdfunding, digital payments, and robo-advisors, among other innovations.

The financial crisis of 2008 marked a turning point for the banking sector, as banks focused on addressing new regulations and fines rather than innovation. This left a gap between customers' expectations and the services banks provided, which FinTech stepped in to fill. Technology companies also capitalised on this opportunity, with Facebook, Amazon, Alibaba, and Tencent's WeChat all making strides in the financial sector.

Traditional banks now face stiff competition from technology firms and FinTech start-ups, which have cherry-picked profitable parts of the banking industry to disrupt. This may give rise to a new banking model, with traditional banks relegated to providing back-end services while tech firms and FinTech start-ups control the front-end consumer experience.

Financial inclusion is another significant benefit of the FinTech revolution. Over the past five years, the World Bank reports that around 700 million people have transitioned from being unbanked to banked, and FinTech continues to expand access to financial services for consumers. The industry is exploring new ways to improve user experiences, convenience, access, and cost savings, such as AI chatbots, biometric data, voice recognition tools, and gamification.

However, the FinTech revolution will also have consequences for the financial industry. Citibank estimates that 30% of banking jobs will disappear over the next decade, while other experts predict job losses as high as 50%. Financial centres like Hong Kong will feel the impact of these job losses, as well as the knock-on effects on related industries. Though new jobs will be created in FinTech, these roles will require different skill sets, favouring creative designers and programmers over traditional banking roles.

To adapt to this new reality, the FinTech community is working with governments, regulators, and the broader community to shape the evolving ecosystem. A fundamental change in mindset is necessary, with parents and students embracing start-ups and entrepreneurship over stable banking jobs. Additionally, the education system must adapt, incorporating design thinking, coding, and product development into finance and business curriculums to prepare the next generation of talent for the future of the industry.