Financial service companies are facing intense market pressures, and technology adoption has become an absolute necessity. Fintech is at the forefront of the financial service industry, transforming how financial products are offered and revolutionizing the way accounting and finance professionals work.
From Back-End Systems to an Economic Sector
Originally, fintech referred to the technology employed in the back-end systems of existing financial organizations. However, it now refers to an economic sector comprising enterprises that employ technology to boost the effectiveness of financial institutions. Fintech companies are looking at completely replacing banking services, as evidenced by a paper authored by the World Bank titled “The Fintech Revolution: A Threat to Global Banking?”
Impact on Investment Banking and Accounting
The fintech revolution has impacted the investment banking industry, democratizing access and providing new access points to in-depth market intelligence. It has also transformed accounting, with automation, analytics, and advisory services becoming more prevalent. Automation eliminates the risk of human error, resulting in more accurate financial reports, and allows accountants to concentrate on more important activities.
Advanced Analytics and Advisory Services
Fintech integration with accounting procedures also allows for more advanced analytics, enabling accountants to make better judgments and provide greater value to their clients. The incorporation of fintech into accounting processes also allows accountants to deliver advisory services to their clients, such as company planning, financial forecasting, and risk management.
Future Developments: AI, Blockchain, and Cloud-Based Solutions
The future of accounting with fintech is expected to involve the growing role of artificial intelligence (AI), the impact of blockchain technology on accounting methods, and the popularity of cloud-based fintech solutions. In recent news, Vesey Ventures, a new venture firm founded by three female former managing directors of Amex Ventures, has closed a $78 million debut fund to back companies “transforming financial services” at the seed to Series B stages. Furthermore, fintech funding in Q1 has hit a new record, with $22.8 billion invested globally across 614 deals, according to CB Insights.