Financial technology (FinTech) is a broad term that encompasses many kinds of technology across many industries. It includes hardware and software, apps and analytics, and solutions for companies of all sizes. Because FinTech plays a role in virtually every kind of company, it is worth taking the time to understand its position in the world economy.
Everyone Uses It
The financial sector is the most obvious place one would look to understand FinTech’s rise in prominence. Indeed, large banks and lenders in many ways lead the growth in demand for FinTech solutions, and have developed many of them. But if you look at the opposite side of the coin, every kind of company relies on financial applications. Companies in all industries look for better, more efficient ways to collect revenue and make payments.
Much of this is now paperless, meaning that cloud technology, smartphone and tablet apps, and on-site hardware solutions matter to anyone whose business involves money.
The Regulatory Challenge
FinTech operates in heavily regulated areas, perhaps more than any other area of developing technology. As a result, when you bring products and solutions to the market, dealing with the regulatory challenges already in place across myriad disciplines is a must, rather than an option. You need to consider and resolve the legal challenges as you define the product, rather than waiting for a later stage of development — or worse, until you are taking the product to market.
Further complicating this issue, as with any area of emerging technology, national and international regulatory agencies are struggling to keep up with financial services regulation. Although it seems that technological offerings level the playing field between large financial institutions and lean startups, most of the regulatory regimes tend to focus only on one-size category. Accordingly, the laws and rules that govern FinTech companies and innovators are necessarily in flux while companies emerge and grow. You need to plan to address issues that create moving targets in your development.
Israel’s Increasing Position
As is the case with many kinds of startups, Israel is developing quickly in FinTech. The country’s focus on innovation and entrepreneurship has led naturally to growth in this vital sector. Further, because the world relies more every day on FinTech products and solutions, global demand for this kind of innovation shows no sign of abating anytime soon.
Beyond the technological innovations required, because money is involved with the development and use of FinTech, any new product needs to offer solutions to cyber security threats that abound in the financial sector. Israel has long maintained a national interest in battling on the cyber security front. Its emergence as a leading producer of startups has included a surge into a leading position on security issues as well.
Because it is so well positioned in these areas, Israel’s highly trained technology workforce has grown into the FinTech industry. In the first quarter of 2016 alone, Israeli startups raised over $1 billion, with FinTech capturing a large portion of that windfall. Those numbers should only grow as companies and individuals develop more specialized understanding of the industry.
With all the technological expertise available, Israel offers a natural place to develop FinTech companies and resources. To take advantage, you will need expertise in both the local and international legal aspects of building in FinTech. Barnea can help you navigate the industry so you can grow quickly.