In recent years, the finance and technology worlds have been colliding, unleashing plenty of disruptions but also new opportunities for how we manage and invest our money.

The concept of financial technology, or Fintech, is a business concept that, in my view, is widely discussed but often thinly understood.

The term covers a wide-range of innovations, from the rise of online stock investing, banking and mortgage servicing to robo-advisers, predictive financial software, blockchain technology, and crypto-currencies like Bitcoin and Ripple.

FinTech Explosion

What’s clear is that Fintech is no passing financial fad, with so many global financial giants doing partnerships and investments with Fintech start-ups.

About 80 percent of financial institutions have entered into Fintech partnerships, according to consulting firm McKinsey’s Panorama. At the same time, global venture capital (VC) Fintech investment in 2018 topped $30 billion, versus $1.8 billion in 2011.

A number of start-ups and some of the world’s biggest financial firms now offer transparent and convenient ways to manage your money and invest for your future at relatively low fees. A growing number of consumers who feel comfortable with digital technology seem to prefer the benefits of 24/7 access to their accounts via mobile phones and laptops.

Mass Adoption

Fintech usage has reached the point of mass adoption, according to research by EY, formerly Ernst & Young. On an average, one in three digitally active consumers use two or more Fintech services, according to the firm’s 2017 Fintech Adoption Index.

So it’s clear that we are living through an era in which online financial software applications and automated trading and banking offering consumers have a mind-boggling array of ways to manage their finances and execute trades.

Yet it’s important to remember that automated financial services aren’t for everyone and there are trade-offs. Let’s look at the pros and cons.

The Upside

Good Investing Discipline: If you’re just starting out in your career and beginning to accumulate savings, Fintech services may be worth a look.

What’s clear is that Fintech is no passing financial fad, with so many global financial giants doing partnerships and investments with Fintech start-ups

The fees are low and with regular contributions, you can establish good investing habits such as disciplined savings and market monitoring.

Rational Investment Decisions: With most automated investing services, the software makes the big decisions for you based on your goals and risk tolerance. Individual investors often make costly mistakes when markets become turbulent and emotions override rational decision-making.

Stress-Free Rebalancing: You don’t need to spend a lot of time researching stocks or refining strategies. Most robo-advisors use mutual funds, or exchange-traded funds to build the portfolio, and provide for automated rebalancing. So, there is no need to execute trades and wonder if your broker’s advice is sound or commission-driven.

The Downside

Customized Strategy: An experienced, human financial adviser can calibrate your investing strategy to your changing needs and your account growth. Some investors like the human touch and tax and the regulatory expertise that a seasoned financial planner can bring to the table.

Complex Financial Planning: If you’re a big account investor with a complex portfolio, automated websites may not be able to factor in the assumptions of your financial situation with great accuracy. Tax attorneys and financial advisers are more expensive, but they can offer valuable advice many robo-adviser services can’t.

Active Investing: Automated investing programs tend to focus on passive investing strategies such as mutual funds, as well as equity and fixed-income ETFs. Financial advisers can help you choose individual stocks, bonds, closed-end funds and insurance products tailored to your individual needs.

Consumers are faced with a multiplicity of choices today. At Interactive Advisors, an online marketplace for investors, we aim to offer both the low costs and convenience of online investing and passively managed portfolios, as well as a broad selection of actively-run portfolios, run by seasoned portfolio managers.

Future of Investing

What is clear is that Fintech is here to stay and it is a global phenomenon.Today’s consumers have diverse ways of managing their money, and an array of low-cost automated services are just a click away. Some investors will still prefer working with a trusted financial advisor or personal wealth specialist at their local bank.

For others more comfortable with online banking and automated investing, a new world awaits. Welcome to the future of investing.