Fintech comes of age: invest in the future of finance

The financial technology sector covers areas ranging from digital payments in emerging markets to bolstering high-street banks’ crumbling IT infrastructure. Years of strong growth lie ahead, says Stephen Connolly

Reg Varney using the first cash machine
The world’s first cash machine was a key milestone in the history of financial technology
(Image credit: © Tom King/Mirrorpix/Getty Images)

“Fintech”, short for financial technology, is often dismissed as yet another buzzword – a way for companies to market themselves and raise money. But there is a great deal more to it than that. Think of it as a sector bringing together money and new technologies to improve financial services. It is closely linked to major technological advances in several other areas.

One is artificial intelligence, which can help financial services companies make decisions about loans, for instance, or help customers by installing robo-advisers to answer questions. Blockchain, the electronic ledger that underpins bitcoin, can help manage transactions more efficiently; data storage and processing advances help companies achieve more scale for less cost; and internet connectivity, through cloud computing, means they can embed their services in everyone’s daily lives across all their devices.

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Investment columnist

Stephen Connolly is the managing director of consultancy Plain Money. He has worked in investment banking and asset management for over 30 years and writes on business and finance topics.