The FinTech industry is transforming the financial services landscape. Operators in this field consist of a range of enterprises that leverage technology to deliver bold new services to consumers and businesses.

The impact of the FinTech industry on the financial industry can’t be overemphasized.

In 2015, investment in FinTech surpassed $19 billion. At that time, United States stakeholders were the largest investors in the industry, staking $13.8 billion in the field. Today, there are between 1,500 to 2,000 significant players in this expanding global industry. Read on to find out how FinTech is expected to continue its take over of the finance industry over the next several years.

The big picture.

Although still young, the FinTech industry has already made a major impact within the financial sector. 82-percent of polled finance executives expressed that they’re worried about competition from major FinTech players. Despite this, 88 percent of finance execs reported that they expect to work with these firms within the next five years.

The FinTech field shows great promise for providing access to financial services to underserved consumers and small businesses. It can reduce the costs associated with loan processing and underwriting. As such, it may serve as a solution that will allow financial service providers to offer smaller, more affordable loans to the underserved groups that were previously unviable.

The emergence of FinTech has positively disrupted financial education and literacy as well as consumer and institutional banking and investing. In the payment sector, it has resulted in advancements such as mobile and online payments as well as virtual wallets. Furthermore, it’s given birth to innovations such as mobile and virtual banking.

FineTech innovations are giving consumers pause to rethink their long-term financial objectives. They now have powerful new resources to manage their personal and speculative finances. Besides, crowdfunding and peer-to-peer (P2P) lending have emerged as a new way for consumers and entrepreneurs to borrow funds.

Growing pains: The evolution of Fintech.

In December 2017, Bitcoin made a powerful, worldwide debut to mainstream audiences by skyrocketing to $20,089 per coin. This strong showing captured the attention of starry-eyed speculators with visions of striking it rich.

Ambitious investors in Bitcoin believed that they’d found the next Microsoft. Others who’d developed an interest in the digital coin were enthralled by the potential of its underlying technology called blockchain.

Despite this positive response, a third group quickly rose to voice their skepticism about this new financial instrument. Naysayers expressed their concerns about security and the ominous feeling of anonymous payments.

As with other emerging and disruptive industries, FinTech has drawn the attention of legislators. In the United States, lawmakers have expressed that FinTech firms need to put more effort into creating opportunities for under served consumers and enterprises. Traditionally, cite lawmakers, these groups only have access to the most high-cost financing alternatives.

Legislators express that it will be unfortunate for FinTech to bypass an opportunity to make a positive impact on society. As things stand, current FinTech offerings serve solely to provide high-cost financing resources to underserved groups. Lawmakers have expressed concern that FinTech will help only groups that could obtain financing in other  thus causing further financial bias and discrimination against underserved parties.

Smoothing out the wrinkles in FinTech.

As the FinTech industry matures, legislators have responded in varying ways. Representatives of the Federal Reserve System (FRS), for instance, have assembled the FinTech High-Priority Initiative to address their concerns about the industry. The Office of the Comptroller of the Currency (OCC) has proposed a limited charter to regulate the new field. Also, the Federal Deposit Insurance Corporation (FDIC) has proposed third-party lending suggestions.

In addition, the Consumer Financial Protection Bureau (CFPB) has started accepting complaints from consumers regarding potentially predatory FinTech lenders. Meanwhile, the Federal Trade Commission (FTC) hosts forums regarding the FinTech marketplace.

Lawmakers have put forth these kinds of efforts because they want to promote innovation while ensuring that the industry serves the public good. Legislators want to mitigate consumer risks and manage the industry effectively while ensuring that the public understands points about FinTech that are relative to their interests.

Officials express that although the FinTech field shows great promise, it’s important to understand the risks and opportunities that the area of FinTech presents. Furthermore, voice representatives, it’s essential to maintain an open dialogue about the subject.

For now, lawmakers are keeping a close eye on the FinTech industry. As it evolves, they will step in as needed to make legal adjustments to ensure the integrity of the field as well as the safety of consumer and business stakeholders.

The FinTech field is placing unprecedented power in the hands of consumers and small businesses, but with what outcome? Looking ahead, the industry faces a challenge in answering legislators calls to make a positive impact on the world.

Hopefully, legislative intervention will produce a win-win outcome for major FinTech players and society. Inevitably, how this disruptive industry affects the world will reveal itself over the next three to five years.

Ryan Ayers

Ryan Ayers

Ryan Ayers is a researcher and consultant within multiple industries including information technology, blockchain and business development. Always up for a challenge, Ayers enjoys working with startups as well as Fortune 500 companies. When not at work, Ayers loves reading science fiction novels and watching the LA Clippers.