Fintech is one of the most innovative and quickest-growing tech segments in the world today. In several ways, it can also be considered an essential service. Without innovations in fintech and surrounding areas like payments and banking, a lot of the world’s development and advances would have looked very different.
Fintech innovations have become more complex over the years, the type of new digital technologies and capabilities in the banking and financial services, for instance, the way these features are put to use, the overall impact it has on end consumers and businesses are very varied and diverse today.
New fintech capabilities are now impacting (albeit in a positive manner) how we do business, how we transact with each other, how we demand innovations in solutions based on changing behaviors. The future of finance and fintech is going to evolve based on all these factors, thereby also influencing how banks and financial institutions serve their customers.
At this juncture, let’s dip into the basic fundamentals that are helping to drive this fintech change globally.
The advent of the internet and e-Commerce
It was the internet and beginning of e-Commerce that paved the way for the basic framework and demands for fintech. Internet capabilities and the growth in e-Commerce the last few decades have influenced a growing need for better and more direct online payments and solutions, laying the foundation for innovators in the space to tap into this opportunity at a time when there were none.
That was the story of yesteryear. With a growing number of businesses moving to online modes of selling, in both B2B and B2C over the years, innovative, safe PoS solutions and mobile payments or online payments quickly became the need-of-the hour. We are now at a point in time where the internet is not a novelty not a basic need and e-Commerce, or having an online store or website through which customers can pay for, buy or subscribe-to your solution a commonality.
The other basic ground fundamentals that are now influencing a newer level of change and innovations in fintech include,
IoT, AI, blockchain and cloud computing
The Internet of Things, Artificial Intelligence and AI-powered solutions, blockchain and cloud computing have seeped into everyday lives, changing how we live, how we work and how we plan our day-to-day activities. These features have also influenced the growth and development of fintech companies by providing more capabilities for them to innovate further on.
Read More: GlobalFintechSeries Interview with Christian Spaltenstein, Managing Director at AFEX
Changing consumer preferences
While the typical B2C shopper of yesteryear may have preferred physically visiting a local Walmart or Costco to buy their groceries or other essentials, Gen X,Y and even Z sport very different buying trends and behaviors. These generations have been brought up with the influence of the internet and handheld devices being at their side constantly and these generations are used to a different pace of life, one in which everything is streamed to them, where orders for everything under the sun can be made via the phone and where everything is inspired by convenience and ease. The typical investor of yesterday would have gone to a bank to assess their funds and working capital, generation X,Y,Z would rather use an all-in-one app to help them identify the right investments based on their financial health while using the same platform to actually make those investments. Changing trends and consumer behaviors have been a basic driving force for developments and innovations in sectors, fintech being one of them.
Barriers to entry have lowered
Fintech is not a new segment, but it is a rapidly evolving sector, as technological capabilities have flourished over time, the situation in the market has changed forcing traditional banks and financial institutions to keep up with this pace or face the threat of being left behind.
Consumers want convenience today and they want that convenience on their fingertips.
In the past, certain local governing bodies might have imposed restrictions on the kind of trade possible via online methods or the kind of currencies that could be exchanged online, with these restrictions opening up, it has opened the door for new innovators to challenge various sub segments in fintech and cause disruption. The lowering of these restrictions eventually made it possible for digital banking apps like Monzo or DBS to allow users end to end capabilities including opening of any account (from their phone) without the need to physically visit a bank branch. Newer fintech solutions offer online exchanges automatic trading facilities, robo-advisors can help investors choose the best options. These changes have paved a new roadway for insurtechs, regtech and fintech in general. Predictive capabilities help predict possible future events thereby allowing investors to safeguard their finances – trusting an algorithm over a human advisor does seem worthwhile to most after all.
Unlimited access to analytics
There is no dearth of data and analytics in today’s world, the newest innovations in these areas have impacted every area of life and business, HR analytics allow HR teams to evaluate hiring potential and trends (even behaviors) of existing and potential candidates, data analytics in martech and salestech can show what users intend to purchase or where they are in their buying journey. This constant access to user information and behavior allows fintech innovators to drive changes and product development based on what consumers may need more of. By decoding current economic trends, fintech innovators can stay a step ahead of the game and their competition.
The need for easier borrowing and lending capabilities
Every business or individual consumer needs access to extra funds at some point, to drive a personal or business need. With lowering of restrictions and innovations in peer-to-peer and business lending platforms, getting access to funds is a less centralized process and is easier on the user. Online lending platforms or simply the act of garnering a loan from a bank can be done in a few clicks today, a process that usually required long queues and heavy paperwork in the past. These non-traditional methods of sharing money allow fintech innovators and investors to flourish.
Read More: The Changing Role and Responsibilities of the CFO, during a Time of Crisis
Growing investment in fintech
Besides the fact that the fintech space is set to witness a whole new set of capabilities and advances in the future, a basic requirement and fundamental that is driving the growth of this sector are the investments and funding within it. With fintech start-ups garnering new series every other day and with new mergers and acquisitions redefining how fintech companies choose to present their offerings to customers as one unit, the game is changing everyday.
Getting Ready for a New World
Fintech has changed and will keep changing the way consumers interact with their banks, with their money and also, how they choose to manage their finances. The growing need for a more seamless and cashless experience will change how the CFO of tomorrow or e-Commerce businesses of tomorrow function.
Paying for goods electronically is just step one in this long journey. The biggest tech companies, like Amazon are already setting new standards by merging their online shopping experience with brick and mortar standards. Under this concept, customers can simply walk out of the store with the items they need and it will be charged to their Amazon account.
These new facilities are set to change how consumers live and shop and plan their futures. Making payments via smartphones and now even smartwatches and other portable devices will soon become a natural feat.
