Climate change and new developments in artificial intelligence could possibly change the face of fintech, venture capital firm Team8 discovered while preparing a report on the industry’s future, published earlier this year.
The VC set out to answer the question, “What will fintech look like in 2030?” and found that while many changes are possible and probable, a few potential, if less likely, changes could change the face of fintech entirely.
Fintech, or financial technology, is the term used to encompass technological changes and advancements in financial services and products.
AI is one of the global processes that has the potential to revolutionize the industry. Regarding AI’s use in fintech, there is good news and bad news, said Team8’s Venture Creation Fintech fund managing partner, Ronen Assia.
A more efficient financial industry?
“The good news is that it will make the financial industry much more efficient,” Assia said, citing the process of taking out a mortgage as an example. Currently, meetings with brokers and wait times for approval can take weeks, but AI could shorten it to a matter of days while offering more personalized solutions as it analyzes individual clients rather than sorting people into broad categories, as is done now, he explained.
The bad news is that “fraud will be a much bigger danger,” he added. AI has made imitating others much simpler and more affordable, enabling fraudsters to impersonate people much more easily.
Traditionally, banks are slower to innovate because of the huge amount of data they have about their customers, but they nonetheless have an advantage when it comes to AI, said fund partner Galia Beer-Gabel. While fintech companies are well-positioned to be a part of the incorporation of AI into banking because of their technical know-how, the banks’ large data sets may enable them to train AI effectively, she explained.
“Large language models and the applications built on top of them [will] create extraordinary productivity gains and cost savings for banks,” the report found.
Overall, AI has the potential to “change completely how we get financial services,” Assia concluded.
Climate change also has the potential to create far-reaching changes in fintech, the report found. “Consumers’ concerns regarding climate change and the environment [will] lead to a significant realignment in incentives for businesses and financial services providers,” the report noted.
Wars and current global tensions seem to create an environment that is hostile to businesses, but there are still reasons to be optimistic, Beer-Gabel said.
“Times of instability and crisis, financial and non-financial, are times that bring to the surface a lot of needs, and often in the time after these crises, very significant companies are born,” she explained.
Team8 is a VC that focuses not only on providing capital for the entrepreneurs with whom they partner but…
Read More: How do AI and climate change affect fintech?
