Developers and IT professionals with career ambitions would be well advised to take a look at the fintech industry: this is where the future of the global financial industry is currently being shaped. This was the impression attendees left the premiere of the fintechworld conference at techweek frankfurt in november 2018 with.
For an entire day, investors and C-level representatives from fintech companies provided insights into the current state of the world of banking, investment, blockchain and financial comparison companies. It is the key trends in this exciting industry conglomerate that give rise to the thesis:
IT professionals who turn to the fintech industry are likely to have extremely exciting career opportunities in the coming years.
- Because, on the one hand, banks are in crisis,
- On the other hand, agile startups are quickly reaching billion-dollar valuations and putting the pressure on traditional financial institutions with their leaps in innovation.
- This leads to an unprecedented speed of innovation leads.
- Accordingly, IT professionals with an overview of the latest trends and the corresponding communication soft skills are inevitably in demand.
Fintechs are turning lead generation for loans upside down:
Let's look at the example of customer acquisition by banks on the internet. Imagine a mid-market or SME looking for a loan or financing. Then he ends up at the inquiry form of a classic bank, which seems daunting and complicated. A corner away, he finds the website of a fintech comparison portal on the web. Everything is much more understandable, clearer and faster to fill out there.
The result: when it comes to conversion rates, this is where the wheat is separated from the chaff. Consistently slimmed-down, low-threshold application sections for online loans can win over many times as many customers (achieve conversions) compared to traditional online forms of traditional banks. So the banks are losing out on new business. The only way they can avoid this is by not being inspired by the customer focus of fintech solutions or by buying new know-how in this area.
Usability becomes a decisive competitive factor.
The result: banks cooperate with fintechs, which offer easy-to-use comparisons for loans, leasing and financing for customers. The fintech is the first to have contact with the customer, not the bank. It is suddenly in the second row. In addition, fintech ideas bring innovation to banks' internal processes and business models.
Irony: the cooperation in turn opens up a marketing opportunity for the fintechs. This is because fintech comparison portals can often then publicly refer to banks as cooperating partners. They decorate their websites with the old familiar logos of banks. The bank logo on the comparison website alone, plus perhaps a TuV or similar seal, creates trust.
Consequence: the banks are currently realizing that their passive consolidation strategies are causing them to fall behind. You buy up, both through the acquisitions and through the acquisition of competent personnel, including in the IT and marketing fields.
Banks are struggling to be more collaborative:
Whereas in the past the bank was an ideal ivory tower for managers, today it suddenly has to be open – to the ideas of innovative, IT-driven fintechs. Skills in areas such as microservices, AI, innovative front-end development, and so on, are gaining in market value compared to many years of professional experience.
Fintechs are not just a breath of fresh air:
Fintechs think completely differently.
In the IT area, for example, they rely – where possible – on microservices instead of monoliths. They are, to use the buzzword, "disruptive" in the best sense, not accepting every legacy, but challenging outdated architectures. What is used is what brings something – not necessarily what has always been there. An ideal playing field for innovative IT professionals, who can open up new, exciting fields of activity in this way.
AI (AI) takes over risk management and asset management
Another impressive example is how excellent returns can be achieved in the area of asset management through AI support. This is not only because the old tradition of letting people make discretionary decisions about the composition of portfolios does not necessarily perform better. Custody accounts managed by algorithms can also be better optimized, even if it's for little things like maximizing the use of allowances through automatic transactions before they expire at the end of the year. And: of course, personnel costs for highly endowed fund managers are also eliminated – presumably to an increasing extent in the coming years.
However, AI does not grow on trees.
It has to be thought up, created and, above all, trained – at great expense. Here, too, IT professionals are in demand. In the coming years, more than ever before. In the end, a constant trial of strength takes place in the financial markets. And so it's not enough to train an investment AI to be very good – it has to be better than the competition, which is, after all, the antagonist. So again, an excellent playing field for high potentials from the IT sector.
The blockchain is only now getting really exciting
The crypto crash of 2018 is not at all the focus for blockchain innovators. The industry is focusing on innovative applications based on the blockchain. The aim is to enable new types of payment flows. These are decentralized, can hardly be manipulated by individuals as far as we know today, and are incredibly flexible in their design.
Tokens can be used to securitize everything – in the blockchain. Basically, tokens can be thought of as small tokens (like bumper cars) or tokens. Just digital. Their special magic is that they are so flexible to use. And from the perspective of blockchain experts, it's clear that we will soon no longer associate tokens – cryptocurrencies – primarily with speculative bubbles. In fact, they should become the basis for completely new applications in the fintech sector.
Those who want to can launch their own cryptocurrency without much effort. For example, shares in a property can be used to acquire a completely different asset class.
Smart contracts enable limitless imaginative applications.
A currency that is worth more at the weekend than on weekdays? A smart contract that sends a defined amount of cryptocurrency to a defined address whenever a defined event occurs? A car loan where the immobilizer communicates with the blockchain and immobilizes the vehicle when payment is late? No problem at all – if only the relevant idea generators and developers want to do so. Technical basis is always a blockchain and the corresponding tokens. What's fascinating is that this makes applications possible that run de facto unstoppably as long as the underlying blockchain exists.
These are innovations that go far beyond the brief crypto hype from 2016 followed by the valley of tears – and will in all likelihood change our financial world and also our economic system quite massively.
Not only IT professions are affected by fintech
Not only IT professions will be touched by it. In the online marketing of banks, for example, there will be no way around rethinking sales funnels, making communication more customer-oriented and relying massively on retargeting – in such a way that it complies with data protection laws and offers no attack surfaces. Here, too, there is obviously considerable demand within the banking world – demand for expertise.
The bottom line is this: if you're currently fine-tuning your career planning in IT and marketing, you should keep an eye on the fintech industry. But banks – chastened and motivated after years of passivity – looking for new solutions should soon also be grateful employers of digital thought leaders.