Fintech and the New Financial Services Industry

Industry

Fintech and the New Financial Services Industry

In microeconomics, an industry is merely a portion of an overall economy that produces a similarly related group of goods, services, or raw materials. For instance, one would commonly refer to the steel industry or the chemical industry. Both micro and macro industries are important for a growing economy. However, there are many similarities between micro and macro economies, such as their reliance on fossil fuels, high levels of trade dependence, and general business operations.

As is true for any economic sector, the value of an industry directly depends on the inputs that go into producing the final consumer products or goods. The final consumer products and services then fall into three categories: primary production, secondary production, and tertiary production. Tertiary production usually refers to manufactured goods sold to customers for retail prices; primary production refers to items produced internally at the enterprise and could include finished goods like consumer products and trucks; and secondary production consists of items that are produced in far-off places for consumption at home or elsewhere. In terms of money, primary production usually yields currency; the other two types, primary and secondary, usually yield cash. In addition, the industry type also determines how the value of the product or service is measured, with consumers buying in for cash and businesses selling in for depreciated dollars.

While accounting practices have evolved and become standardized across most industries, accounting systems also depend on various dimensions of the industry, including geography, industry verticals, customer profiles, and cost structure. Most IT professionals today have learned to become proficient managers of multi-faceted industries, which they apply to their own organizations and to emerging spaces like fintech and software outsourcing. There are multiple examples of verticals in the financial services industry, ranging from investment banking and corporate securities to commercial real estate and client servicing. All of these verticals require innovative accounting systems and techniques in order to determine monetary assets and liabilities, as well as in order to provide timely and accurate customer service and business finance models.