Fintech’s Greatest Contribution Isn’t Innovation but Access to Information

Fintech has revolutionised and redefined countless areas of modern life. From savings accounts and investments to the very concept of value exchange through innovations such as blockchains, technology has changed the game in multiple ways. However, for all the clever products and mechanisms fintech has brought to the fore, the sector’s greatest achievement is opening up the financial world. Today, through a combination of access and education, more people are aware of how to earn, invest and save in the best ways possible. That’s due, in part, to digital products breaking down barriers and making the average person more aware of what’s possible.

New ideas and new takes on established ideas

Indeed, it’s possible to go to a single extreme to prove this point. Prior to the advent of Bitcoin, few people outside of the financial world knew about, let alone understood, the concept of centralised currencies. However, as Bitcoin et al have grown in popularity and blockchains have become more familiar, people are becoming aware of decentralised finance (DeFi). The average person on the street might not be able to explain the nuances of DeFi. However, they may have a broad understanding of it and, in turn, know that there’s a difference between centralised and decentralised finance. That’s progress. It might be a small amount of progress, but it’s progress, nonetheless.

Bringing it back to more tangible examples, fintech has made more people aware of the ways in which money can be used as a tool. In other words, money saved doesn’t have to be idle. For instance, using a comprehensive online knowledge base, anyone can learn about the basics of a self-invested personal pension (SIPP). SIPPs are tax-efficient accounts that allow individuals to invest in stocks, bonds, and ETFs. As long as the individual stays within their annual investment allowance (£40,000 in 2021-2022), any profits their investments yield will be free from capital gain tax. What’s more, the government will apply tax relief based on the contributions made and the individual’s income tax band.

Digital tech has increased everyone’s financial IQ

In addition to learning about the basics of SIPPs, people can use online knowledge hubs to check they’ve got the right product. They can also use calculators to ascertain how much, theoretically, they need for retirement. Importantly, it’s not just knowledge that people can take advantage of. The rise of online investment platforms has lowered the barriers to entry. Because the market is becoming increasingly competitive, investment companies now offer incentives, such as fee-free trades, low monthly fees, fractional shares and welcome bonuses. Again, what we can see here is digital technology making financial matters easier to understand and easier to access.

Source: Pixabay

Fintech, as an industry, has created a variety of impressive innovations. Big data and artificial intelligence are helping financial institutions assess customers more efficiently and, in turn, combat fraud. Blockchains have brought a new dimension to value exchange. Biometrics have facilitated the creation of Face ID logins which have made mobile banking safer. All of these things are the result of fintech. However, perhaps the industry’s greatest achievement is opening up the financial world. By making more things accessible to more people, fintech has increased the average person’s financial IQ and that can only be seen as a positive.