Fintech has been disrupting the overall structure and competitive environment within the finance sector and related markets over the last few years, in a big way. With the worldwide spread of the Covid-19 pandemic, businesses have had to change how they function; regulatory frameworks and newer innovations and demand for technologies that facilitate easier contactless and paperless frameworks have become the need of the hour.
Innovations in finance technology are impacting businesses and overall process models and goes to show how the pace of new transformations will be the force that is set to drive a transformation in how financial institutions function.
Read More: How the Crisis-Fuelled Digitization of Banks Will Spark Long-Term Customer Loyalty
Studies have shown that Global investments in FinTech more than tripled in 2014, reaching over $12 billion.
What are some of the biggest implications fintech and new adoptions in tech have had in 2020 on the financial services sector? Let’s find out.
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Redefining Business Models
There have been a slew of fintech start-ups disrupting the industry, by introducing innovative features across facilities and redefining finance offerings, from mobile payments to banking solutions.
The ways in which newer fintech businesses have remodeled the way certain processes are now being run within both the banking and finance sector as a whole signifies the impact these innovations have on transforming core business models.
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Neobanking, Digital Banking, Open Banking
One big learning from the lockdowns that over 180 countries had to face as a result of the growing threat from the Covid-19 pandemic was the inability to actually visit their banks and financial institutions. Over the years, the demand for digital banking, mobile banking facilities was already showing a steady climb given the convenience it offered both business and individual users. The idea behind new banking technologies that allow users to bank from anywhere reduces their need to visit a branch, an age-old concept that is now reducing the need for banks to run as many branches as before. Sophisticated apps allow bank account holders to do everything they could have done via their own personal devices and it is the evolution of fintech that has made room for this progression – from moving to a physical banking experience to a step ahead, in the past when internet banking became the rage, to the present where everything you need done, be it investing your funds or making a payment: all of it is easily doable via a handheld device.
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The Digital Experience is Now Mainstream for Payments, Retail Banking, Wealth Management and More
First came the idea of a website, then the idea of transacting through that website. Further advances have now become the new normal changing the way financial institutions and banks regulate everything, from personal wealth management to the enriched experience they now offer customers. One of India’s largest private banks, ICICI bank, for instance recently incorporated a new feature that allows customers to cancel their card if it’s misused or apply for a new facility (even cheque book) via WhatsApp!
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The Growing Influence of The Cloud
To help ensure a seamless user experience and to facilitate better services on personal devices, cloud-based computing and cloud-based software-as-a-service apps are crucial elements. The growing innovations in cloud-based infrastructure coupled by improved security features will help financial institutions centralize essential services and processes like KYC verifications and their customer data.
Read More: The Rise of Contactless Payments
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Security will Become Priority Number 1
Given the move to a more cloud-based and mobile friendly structure that allows users to transact, invest and research their financial data on the go and in one place will increase the need for better security solutions. Cyber-security will have to turn into a point of concern for the finance sector as a whole given that the number of threats have been rising, thereby compromising user data.
Third-party vendors, evolving and complex technologies, cross border exchanges of payments and data, increased use of portable devices to access information via apps are all open grounds to cyber-threats thereby initiating a growing need for better security measures.
While the fintech sector evolves, so will the finance and banking sector. New technologies and their capabilities will be built based on intelligence gathered. What will drive revenue for fintech in its entirety are new developments based on key trends that customers are showing higher demand for. As a result, what drives innovations in the sector today could be largely different from what will drive innovations in the years to come. As banks and financial institutions change how they interact with their users by offering a more customer-centric model that meets customers where they are, the foundation of this sector will transform, just like other segments have over the years.
