The world of finance is in pain due to this aberrant pandemic. Companies all around the world are filing for bankruptcy, hundreds of thousands are losing their jobs and, in the meantime, the political scene is going through what will be remembered as the biggest crisis of the modern era. With such an unpleasant scenario, it’s mandatory to analyse, ahead of time, what will be the next steps within the financial sector, or shall we say “the fintech sector”?
Technology: The Sector Which Never Stopped
The Coronavirus outbreak reached Europe and the US in February, effectively 4 months ago. During this period, companies and entire sectors (i.e. the hospitality and events industries) have completely shut down with some of them only re-opening now. Whilst such business sectors were collapsing, the technology industry was flourishing, “infecting” more and more business sectors with automation tools, remote working-related software and much more.
The financial sector was one of the main targets of the tech industry, with examples like Monzo, Revolut and Santander’s recent Blockchain division being the brightest ones. In the past 4 months, in fact, the number of tech-related applications applied to the finance industry has seen a net 40% (yes, forty) increase in comparison to the previous DECADE. There have been more tech innovations in the past 4 months than within the 2000-2010 decade, which is a signal for what the future will look like.
Data Driven Finance vs Object Driven Finance
In order to understand OBF (Object Driven Finance) and DDF (Data Driven Finance) we can analyse a situation. Let’s say you’re applying for a £300.000 mortgage for your first property. Your loan provider will have to assess if you’re a potential good payer, establish warranties and much more (OBF). With DDF, all your credit scores will be condensed into one single database which will be available (legally) for loan providers to consult. As you can see, the second is a much faster way to assess whether you’re suitable for the loan you’re asking for.
Santander has already built a similar architecture, which sees the foundation of its database within the Blockchain. DDF is most likely to become the industry standard for big loans applications and many analysts are stating that this “change” could happen within the next 5 month, which, for technology this complicated, would be record-breaking.
Mobile Finance And Cloud Data
Pretty much everyone uses mobile apps to control their finance, but most of the time these are merely cash accounts or savings pots. With this in mind, Monzo and Revolut recently announced that they are moving their databases in the cloud to implement bigger forms of finance within their applications. This could increase the competition level of finance-related applications and, in fact, some app developers in the UK already stated how the majority of their finance-based clients are looking into ways of implementing Blockchain features within their solutions.
The world of fintech is going to overcome the financial sector as we know it. With (unfortunately) hundreds of thousands applying for loans, quick and solid digital architectures aren’t an experimental matter anymore, but a solid statement towards what’s the evolution of this sector: technological awareness.