Financial technology ("FinTech") is a broad term that encompasses many kinds of technology across many industries. It includes hardware and software, apps and analytics, and solutions for companies of all sizes. Because FinTech plays a role in virtually every kind of company, it is worth taking the time to understand its position in the world economy.
1. Everyone Uses It
The financial sector is the most obvious place one would look to
understand FinTech’s rise in prominence. Indeed, large banks
and lenders in many ways lead the growth in demand for FinTech
solutions, and have developed many of them. But if you look at the
opposite side of the coin, every kind of company relies on
financial applications. Companies in all industries look for
better, more efficient ways to collect revenue and make payments.
Much of this is now paperless, meaning that cloud technology,
smartphone and tablet apps, and on-site hardware solutions matter
to anyone whose business involves money.
2. The Regulatory Challenge
FinTech operates in heavily regulated areas, perhaps more than any
other area of developing technology. As a result, when you bring
products and solutions to the market, dealing with the regulatory
challenges already in place across myriad disciplines is a must,
rather than an option. You need to consider and resolve the legal
challenges as you define the product, rather than waiting for a
later stage of development — or worse, until you are taking
the product to market.
Further complicating this issue, as with any area of emerging
technology, national and international regulatory agencies are
struggling to keep up with financial services regulation. Although
it seems that technological offerings level the playing field
between large financial institutions and lean startups, most of the
regulatory regimes tend to focus only on one-size category.
Accordingly, the laws and rules that govern FinTech companies and
innovators are necessarily in flux while companies emerge and grow.
You need to plan to address issues that create moving targets in
your development.
3. Israel’s Increasing Position
As is the case with many kinds of startups, Israel is developing
quickly in FinTech. The country’s focus on innovation and
entrepreneurship has led naturally to growth in this vital sector.
Further, because the world relies more every day on FinTech
products and solutions, global demand for this kind of innovation
shows no sign of abating anytime soon.
Beyond the technological innovations required, because money is
involved with the development and use of FinTech, any new product
needs to offer solutions to cyber security threats that abound in
the financial sector. Israel has long maintained a national
interest in battling on the cyber security front. Its emergence as
a leading producer of startups has included a surge into a leading
position on security issues as well.
Because it is so well positioned in these areas, Israel’s
highly trained technology workforce has grown into the FinTech
industry. In the first quarter of 2016 alone, Israeli startups
raised over $1 billion, with FinTech capturing a large portion of
that windfall. Those numbers should only grow as companies and
individuals develop more specialized understanding of the
industry.
With all the technological expertise available, Israel offers a natural place to develop FinTech companies and resources. To take advantage, you will need expertise in both the local and international legal aspects of building in FinTech.
Originally published July 17, 2016
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
