The challenges of technology in finance - Fintech Morning

The challenges of technology in finance


The objective of FinTech is to generate new ways of exchanging, storing or multiplying value efficiently, making use of technological advances.

It is a topic of interest to the general public, but especially to entrepreneurs, business accelerators, investment funds and banks.

FinTech applies to financial processes, products and services. In 2014 alone, global investment in FinTech operations tripled, according to figures published on the World Economic Forum website.

Such is the case of Bank of America, which spent $3 billion annually on what they called “technology initiatives”.

Similarly, the financial services company JPMorgan Chase invested almost the same amount in technology, as reported by its chairman and CEO Jaime Dimon.

Included in the spending is the addition of a team of 200 analysts and data scientists to build its own extraordinary in-house big data capabilities.

These serve to improve marketing, attract new customers, bring efficiency to banking operations and improve credit delivery, according to Dimon.

Rethinking the blueprint for 100% digital banking

The classic image we have of banking is that it is somewhat inefficient. Long lines at teller windows to make a payment, or to resolve a dispute, are the symbols most often used to represent its mechanisms.

Therefore, one of the main challenges of technology in finance is to improve service.

Many companies are already applying this by adopting online banking activities, such as movements and transfers from the Internet and even from a smartphone application.

An example of this is Bankaool, considered the first Mexican bank to operate exclusively online.

Beyond qualifying it as a good or bad project, that succeeded or failed, we take it as an example of a digital approach to banking.

Like traditional banks, it offers the opening of different accounts, investments and savings plans, as well as obtaining loans.

The user has a series of data that identifies him, as well as a debit card for use in external ATMs.


The main difference with traditional banks is that it does not have physical branches, so it is effectively an option to say goodbye to long lines and hours of waiting.

Bankaool was founded in 2006 as a company that offered financing to producers and companies in the agri-food sector in Mexico.

At that time it was known as Sociedad Financiera de Objeto Limitado (SOFOL).

In 2012 it began operations as a bank, with the authorization of the National Banking and Securities Commission (CNBV), and in 2014 it was transformed into Bankaool, Mexico’s current online bank.

That same year it launched a digital platform to offer technological, simple and accessible solutions to its customers.

However, the task of digitizing banking has become complicated: Bankaool has recorded losses in the five years it has been operating. From January to August 2017, it has reported the loss of 56 million pesos.

This streak could lead it to total closure and subsequent disappearance. One of the errors that were detected in Bankaool was the growing number of unpaid loans by its customers.

The bitcoin system

Ironically, while all-digital banking has failed to catch on, virtual currencies such as bitcoin continue to gain followers and supporters.

The difference is that bitcoin has not completely forgotten the physical world, as it has even installed an ATM in Mexico City, so that people can approach to make necessary movements.

The site specialized in the subject Criptonoticias points out that bitcoin can be understood as any currency and at the same time as a financial and digital system that does not belong to any person, country or government.

As it is a virtual currency, which does not exist physically, it does not have territorial limits either.

In November of this year, each bitcoin unit reached a value of seven thousand dollars. Despite its high valuation, it is important to consider the risks and vulnerability of the currency.

In recent years there have been unexpected and abrupt shutdowns of various bitcoin management platforms, leaving the owners of virtual currencies without the tools to take action.

One such event, which exemplifies the problems of a fragile system, was the temporary closure of the online platform Mt. Gox in 2014.


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Edinson Love

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