Harnessing the power of Fintech

Fintech is the latest breakthrough in the finance and banking sector and has the potential to transform the industry.

'Fintech' short for Financial Technology refers to innovative digital programmes used to enhance financial services.

Technological advances have disrupted many industries but its contribution to the financial sector has been nothing short of revolutionary.

According to Dr Co-Pierre Georg, director of the financial innovation lab at UCT, fintech “has the potential to reduce the cost and improve the efficiency of financial services.”

“Consumers will be provided with more flexibility in terms of offerings, in addition to the ability to seamlessly interact and transact in real time with service providers.”

He says financial service providers also stand to benefit as the technology will enable them to improve understanding of their customers' behavior, allowing them to provide tailored financial services.

Below Georg highlights four Fintech models that are making waves in the financial sector:


A database that is shared, synchronized and maintained across a network not bounded by geography which is designed to be resistant to modification of the data. A blockchain is composed of blocks stored in a serial manner, with each block cryptographically linked to the previous one as a security measure. Each block contains a set of new transactions made by network participants that have also been secured using cryptography.


This is a peer-to-peer electronic cash system that allows for online payments to be sent directly from one party to another without the need for a financial intermediary to act as a central trusted counter party. This digital currency is issued on a blockchain and works without the backing of a central bank.


The practice of funding a project or venture by raising small amounts of money from a large pool of investors. This is typically done over the internet and can be used to facilitate the process by means of issuing digital tokens representative of equity or a stake in future cashflows generated by the project.

Peer-to-peer lending

The practice of individuals and businesses lending money to other individuals and businesses through online services that match lenders with borrowers, without the use of an official financial institution as an intermediary.

Too good to be true

But like every technological advancement there are some drawbacks says Georg.

“One of the disadvantages is that financial technology has the potential to be exclusionary, in that most of the products and services offered are often geared towards financially literate people who are already participants in the formal financial sector.”

As a result the technology may possibly fall short of addressing “the unbanked and unserviced population,” explains Georg.

Other fintech trends

But despite the risks and shortfalls more companies and financial regulators are investing in this technology and supporting its development. Blockchains in particular have gained legitimacy in the eyes of the industry, and multiple financial institutions have started to invest heavily in blockchain research and development, says George.

“Collaboration is becoming a big thing, as banks and other financial institutions start to partner with financial technology companies.”

For more insights join the Fintech course hosted by UCT [email protected]


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