05 Oct 2015
As Singapore builds the world’s first Smart Nation, a debate is being waged at MIT on the short and long-term impact of technology, with machines taking on skills once thought uniquely human1. At the forefront of this tidal wave is Financial Technology, also known as FinTech. Based on global consulting firm Accenture, international investment in FinTech ventures tripled from US$4B in 2013 to US$12B in 2014. Love it or loathe it, we just can’t ignore it.
Simply put, FinTech is the use of technology to support or enable financial services. In US, FinTech has impacted a wide array of sectors, including lending, personal finance, retail investment, consumer banking, remittances, payment, institutional investment, equity financing, financial research, banking infrastructure, security and authentication, small business tools and crowdfunding. Even in Singapore, we see homegrown start-ups pulling their weight, such as personal finance educator PlayMoolah, payment company Xfers and crowdlending platform Funding Societies.
Regardless of whether you’re a public accountant or an accounting professional, this is an opportunity and a risk. Among public accountants, we have observed FinTech becoming a dedicated practice that is gaining importance. A case in point is accountancy firm Kingston Smith in UK. They pride themselves on having capabilities in technology and financial services to provide regulatory advisory, internal audit and tax work, helping FinTech companies to navigate the muddy waters of an evolving regulatory environment. . For accounting professionals, developing a strategic view on FinTech could reduce cost, such as with the use of cloud-based accounting software Xero, and open fresh revenue channels, such as with the access to new online marketplaces.
However, we need to be mindful of potential risk too. Software could reduce human effort, but at its extreme, it could replace humans for certain tasks. In 2014, the Economist predicted accountants and auditors as among the top 3 professions most likely to be replaced by robots in the next 20 years. This is echoed by a Wall Street Journal article in 2015, titled “The New Bookkeeper is a Robot”. Some consider rule-based disciplines such as accounting and finance the perfect candidate to be converted into lines of codes, while others opine that online marketplaces could reduce demand for human deal-making, even for more sophisticated fields such as mid-cap private equity deals.
So what are the implications for accountants? We believe the new space created by FinTech is up for grabs if we start now. Just as any market shift, the rise in FinTech is likely to take several years before it comes to fruition in Singapore. In fact, we have observed firms in similar industry such as the legal profession, beginning to position themselves as the go-to expert for FinTech. Others may choose to move upmarket, focus on high-touch niches and circumvent it all together. As the waves of FinTech arrive at the shores of our Smart Nation, we could ride it or dive under it, but certainly not stand against it.
1 The Wall Street Journal, Feb 2015
About the Author: Kelvin Teo, CA (Singapore), is Co-founder of Funding Societies, a peer-to-peer lending platform for individuals to invest in SME loans in Singapore.
Share this Page