A word from Equidam co-founder Daniel Faloppa

Earlier, we talked about comparing burn rates and FinTech trends that drive innovation in finance. Today we will address the hot topic for technologies that are empowering FinTech.

Banking and securities institutions will spend $485 billion on information technology in 2014, according to a research by Gartner. This amount is higher than in any other sector. The financial crisis prompted financial institutions to innovate their technology at an even faster pace and startups are more and more providing solutions to problems that the sector has faced for years. But what is allowing startups to solve problems that institutions of this caliber cannot solve on their own? New technologies.

The advent of big data technologies, easier integration of payment systems and the standardization of accounting data are both empowering the creation of new solutions and lowering the costs and thus the entry barriers in the market.

FinTech technology 1: XBRL and the openness of accounting data

XBRL (eXtensible Business Reporting Language) is a XML based syntax that can represent any figure in companies financial reporting. It has become the standard of major accounting APIs like ExactOnline and Quickbooks.

The open source protocol allows software companies to develop analytics for all financial variables. Analytics that can easily be compiled into management dashboards, reports or analyses.
Different companies are standardising the information provided and adapting it to create better credit scores, better decision making, or better business decisions. Other startups (Declaree) use this standard to easily communicate invoices data to accounting software.

 FinTech technology 2: Payment Systems and money transfer

Since the advent of Paypal and the transfer of money via email, payments started to be detached by the banking institutions and fall more and more under the control of the final user. Multiple startups and companies benefited and are benefiting from this trend, see Monitise and half of the new class at startupbootcamp fintech.

Square, Apple pay and other prestigious examples are trying to get into the old and lucrative market of payments, all powered by easier integration with traditional institutions.

FinTech technology 3: Big Data, the real leap forward

Speed, reliability, cost effectiveness, and above all, the capacity to analyse billion of data-points. Big data is the game changer in FinTech. Analysing previously impossible volumes of data can change the way banks analyse and create credit scores, investment managers compare opportunities, financial algorithms perform light speed trades on stock exchanges.

AWS (Amazon Web Services) and Google App Engine are of course the leader providers of infrastructure for this type of tasks even though Microsoft is catching up. Map-reduce technologies for performing operations with data are also getting more affordable and more advanced thanks mainly to the Hadoop open source project. Building on top of these technologies is not easy, but the direction is clear, it is pivotal for Fintech and for financial institutions to be aware of these new technologies and to make the best use of them.

The sector offers unlimited opportunities to the entrepreneurs and the programmers that have both the financial vision and the technical capabilities to make use of this pre-made infrastructure. Equidam is of course looking at these developments very closely and working on integration of these technologies to improve our valuation service for all our users.

Do you think there is anything we missed? Let us know in the comments or on twitter!