As part of a campaign looking at the workplace of the future, Nick Hungerford from Nutmeg looks at where the financial technology industry will be in five years' time.
The rate of change we are currently experiencing is faster than ever before. Development in technology is growing and changing so quickly now that we are seeing predictions from the past becoming a reality. If we look at the mass adoption of technologies over the years this is only too clear to see. It was 70 years before planes were used by 50 million people. Facebook gained 500 million users in a tenth of the time. With technologies that already exist being developed 10 times faster than ever before we can look ahead to 2020 and envisage how these developments in technology will affect the financial industry.
Back in the early 1990’s the idea of going into a shop with a card and a number to pay for goods would have been impossible to imagine. Now it’s everywhere you go. Credit scoring for a loan generated by a computer is how we are all assessed now. We used to have to sit in front of a person who would make that decision.
So what does this mean for the future? How will this affect the financial technology industry?
Our affinity with technology will only ever become stronger and global business empires will be run from a single smart phone. No longer will there be a need for huge tower blocks filled with people. Entrepreneurs will be able to run their multi-million pound industries from their palm. Stockbrokers will manage huge client portfolios from a watch – we are already seeing this technology coming to market – and somewhere there is a 15 year old sat in his or her bedroom inventing the next big thing that will revolutionise how businesses operate.
Individual viability and risk will be determined by this technology. Imagine an app that calculates your risk for investment just by answering a few questions. No longer will it be enough to type your details into a computer and get a credit score. Now your personality traits, motivational fit and attitude will become a tangible, contributing factor. We are already seeing companies adopting this technique when interviewing new staff.
When borrowing money there was a stage in the early 2000’s when you could be granted a loan and the money would be available in 24 hours. This system will be antiquated by 2020 as money is assigned to individuals and businesses based on evaluation scores stored on a super computer. The user will just need a code to make it available.
Investors will be able to instantly calculate the risk and expected growth of their portfolio by a similar smart app that will hold a myriad of data on the company they are looking to invest in. This information will not only be the history, financial assets and trading history but also the psychological profiles of all of the directors and senior management. How much more calculated could it be? Add to this future predictions, even down to storms and possible natural disasters, and the impact of these on portfolios and the investor is significantly more informed than ever before.
For would-be equity crowd funders the potential risk would be reduced significantly with this data available and the technology available for these projects would mean that many more would succeed. For investors looking at crowdfunding options imagine a calculation tapped into the phone that would return your own personal recommendations.
So we can look forward to a future with less risk and a more stable financial economy worldwide; a system that answers more questions than ever before and reduces risk significantly for businesses and investors. Will this see the growth of a more financially stable world? It certainly gives us plenty to think about while we’re trying to keep pace with the changing world.
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