Financial Technology: The Future of Financial Services is Now

Finance and Trade
03/05/2016 22:08

Uphold CEO Anthony Watson sheds light on how Financial Technology is finally transforming the legacy financial services industry and why it’s here to stay.

While the Internet has brought tremendous efficiencies to nearly every sector in the economy, the financial services industry remains relatively unimproved. Businesses today, in particular those in the diamond industry, are painfully aware of the lack of transparency, the lack of convenience and online functionality, the lack of interoperability between geographies, and the high fees charged by banks.

The technology to improve financial services, however, does indeed exist and is being developed and implemented by Financial Technology (FinTech) firms. These firms are accelerating growth in the industry by increasing the awareness of customers around the possibilities of technology and the benefits it brings. FinTech firms are able to provide solutions which are dramatically more cost-effective, efficient and transparent, while also more accessible and easy to use.

Traditional banks are struggling to keep up with the pace of change. Apart from the disruption to their business models which price transparency brings, these firms face key technology challenges, making their disruption inevitable.

Legacy systems that cannot keep pace with current innovation 

When we hear the term “Too Big to Fail” our hearts stop and we start to fear the worst following the 2008 collapse of the housing market. There is a reality for financial services that should strike more fear in all of us: “Too old to update.” The legacy banking systems that support commerce globally is in dire need of upgrades. Bank IT departments are torn between keeping the lights on and delivering new functionality that consumers demand. Given the size of the infrastructure and data centers they support, even for those who do attempt to integrate new technology, the process is slow and expensive.

Complexity 

The core systems of traditional financial institutions were developed 30+ years ago, with most IT departments still developing products and services on top of this legacy foundation. These stacked components lack the ability to interact with each other, creating a complex and tangled web of systems that are high cost to support, make it difficult to move to newer technology and trap valuable data across multiple platforms that cannot be easily extracted.

These complex legacy systems result in a lack of flexibility, which then cripples traditional financial services providers, making them unable to take advantage of innovation. Even for the firms which claim to be offering digital solutions, more often than not this is nothing more than “lipstick on a pig” and behind the online façade, the services remain manual, slow and expensive. Having spent much of my career in traditional financial services, as a Chief Information Officer for Wells Fargo, CitiGroup and Barclays, I am all too aware of the challenges facing legacy banks.

FinTech companies, resulting from the past one to two decades of technical developments, are often a hybrid benefiting from components of both traditional services and innovations. In this way, they have the flexibility to incorporate solutions to address the pain points of customers without losing the benefits of the existing system. They bring the same, if not greater, security and regulatory compliance, but with additional functionality, improved efficiency and much lower costs.

FinTech platforms deliver secure, real-time payment processing and clearance, uphold AML and KYC best practices and store digital currencies and commodities, which makes them perfectly suitable to the needs of diamond traders. Its technology is a significant advantage and the key to successfully disrupting an industry in dire need of improvement.

These platforms provide individuals as well as businesses the benefits they demand in this digital age, facilitated by technological innovations and a business model that believes in fair, transparent solutions. These include:

Fair, transparent pricing: Consumers and businesses are seeking more competitive pricing and thus alternatives to traditional bank channels, which tend to be expensive and hold a myriad of hidden fees.
Fast and full service: Consumers and businesses expect the ability to access data and services at the touch of a button, on their devices and such as online platforms. Uphold provides the efficiency and functionality demanded today.
Global solutions: Heightened global trade and international procurement among businesses means the need for improved cross-border payment and foreign exchange services by leveraging innovation.
Transparency: Consumers are demanding greater transparency from financial institutions: Uphold is leveraging technology to provide transparency, publishing a verifiable, real-time proof-of-solvency and maintaining a full reserve of member deposits

The Uphold platform is a strong demonstration of the scale, flexibility and cost effectiveness that FinTech solutions can bring to financial services. Whether Fintech fully replaces traditional providers or works together with them to help them catch up via our technology remains to be seen. What is certain is the fact that financial services are undergoing a huge transformation. Uphold is proud to carry out the vision through our expertise and ability to execute. We are leading this industry into the future.

Anthony Watson
President & CEO, Uphold and Global Fintech Leader

“Uphold is proud to be the world’s fastest-growing FinTech platform, bringing a comprehensive suite of digital financial services to the diamond industry. Our technology is our advantage and the key to successfully disrupting an industry in dire need of improvement.”