Fintech is a buzzword that’s on the lips of about every professional involved in banking, finance, investment and money matters these days. It stands for “financial technology.” In short, Fintech denotes the revolutionary effect of the Digital Age is bringing to the way wealth flows around the world.
Another trendy descriptor word often used in conjunction with Fintech is “disruptor.” It seems that industry observers cannot dwell enough upon the “disruptive potential” that Fintech poses for traditional banking methodologies.
But consider the view of 40-year banker Anil Chaturvedi. Since he took his first entry-level job at the State Bank of India in 1973, he has lived and worked through groundbreaking trends within the banking industry spanning four decades. He said Fintech is just the latest manifestation of the evolution of banking, a process that has been going on for centuries.
Does Fintech pose a threat to traditional banks? Anil Chaturvedi believes not. The suggestion is often made that powerful new tools, such as the advent of cryptocurrency, brings the potential to make banks obsolete. Another is crowdfunding. This method of raising money by appealing directly to thousands of individual investors means an entrepreneur can simply bypass a bank to raise start-up capital.
But Anil Chaturvedi said cryptocurrency and crowdfunding are mere tools that have little to do with the range of complex functionality of banks. He speaks of something called the “back end of financial services.” This denotes a vast infrastructure that performs numerous tasks in the lifecycle of business transactions. Crowdfunding is merely a first step to get some start-up cash. After that, however, a business requires the framework of an established transitional banking system in which to function in numerous ways.
Anil Chaturvedi views Fintech as an adjutant to banking. He also makes the point that Fintech is not disruptive to banking — just the opposite, in fact. Banks have been at the forefront of creating Fintech all along, he said. Consider something as simple as ATM machines, credit cards or online banking. Those are solid examples of Fintech. Who developed them? The banking industry itself, Chaturvedi said.
