Since computers whirred into life in the early 1960s, the world has witnessed unprecedented innovation and transformation in almost every aspect of life. Tasks that could only be performed by humans just over 20 years ago have now been taken over by automated software. The financial industry, in particular, has undergone significant transformation.
Traditional banking, insurance,
Breaking down Fintech
The word “fintech” is simply a combination of the words “financial” and “technology”. It refers to technological innovation in the design and delivery of financial services and products. At its core, fintech has helped companies, business owners and investment managers better manage their operations thanks to specialized software and algorithms.
Initially, financial innovation was limited to relatively simple tasks such as data processing and automation of routine tasks. Today, fintech encompasses more advanced systems that are able to analyze information and make decisions based on machine-learning logic. Machines that “learn” how to perform tasks over time have been developed. The use of such systems has brought about high levels of inefficiency that surpasses human capabilities.
A characteristic of fintech is that:
A. It is at its most advanced state using systems that follow specified rules and instructions.
B. It’s limited to relatively simple tasks such as automation of routine processes and data processing.
C. It has largely been driven by increased availability of data and advancement in technology.
The correct answer is C.
The two most important reasons behind the torrential growth in fintech are:
- Extremely rapid growth in data — including their types, quantity, and quality — and
- Technological advances that have made it possible to analyze and interpret data.
Reading 57 LOS 57a: