What is FinTech?
2000 years ago, King Hieron engaged hundreds of people to launch Syracusia, a 55 meters long ship. Despite their efforts, they failed. Instead, Archimedes, built a pulley system that allowed him to single-handedly move the ship.
Even then, Archimedes managed to invent and use technology to solve a problem, and today we have FinTech! So what exactly is FinTech? While there is no correct or wrong answer, FinTech uses technology to support financial services to make our lives easier.
With the increased use of smart phones and the development of appropriate tools and platforms, FinTech managed to penetrate the market, offering products and solutions for which banks were claiming that no substitutes exist such as e-payments and online trading. Regulation may slow down the growth that FinTech has made so far, but things are moving forward in re-shaping the industry's status quo.
Now What?
Over the last few years, banks have achieved something great—they've transformed their fear to an opportunity, their enemy to an ally. The result: Traditional banking is working with FinTech side by side and the CEOs and shareholders are jubilant because they offer new products that are relevant to their customers' needs such as:
- Saving time
- Saving costs
- Improving compliance
- Reducing exposure to risks (e.g., fraud)
- Offering a better client experience
Client Experience & Loyalty
Offering a better client experience are magic words for the banking industry. The recent Millennial Disruption Index revealed 71 percent of those that were polled prefer to go to the dentist than to listen to what banks are saying.
Why is that? Is it because the products offered are not relevant to young people?
Over the last few years, the meaning of loyalty has been redefined. Loyalty is not measured only as the quality of the services offered to clients. Loyalty is measured by how relevant the services are to the needs of bank clients.
Today, traditional bank and FinTech organizations are working together to offer more relevant products for their clients.
Payments
As per the PwC FinTech Global Report, 60 percent of all survey responders highlighted payments as the most likely sector to be disrupted by FinTech due to the introduction of cash-less payments such as Apple Pay and Bitcoin.
Wrap Up
It is almost impossible to predict exactly how FinTech will redefine traditional banking as we know it, especially when the estimated cumulative investment in FinTech globally is expected to be more than $150B over the next three to five years. It is almost certain though, that no one can stay uneffected by those changes.
FinTech and digital banking do not have borders and they are not housed in a specific region or country. They live with those who have the vision and are willing to take the actions for moving forward to a new era.
Over the next few years, there will be a change in the profile of bank customers with millennials assuming more significant roles in the global economy. Such customers compare or will start comparing their experiences in using Google and Facebook with their experience from their financial service providers.
FinTech is the mean of offering relevant products to your clients. Things move quickly and if an organization cannot keep up and meet the needs of their existing customers, there are other options from which to choose. As a whole, FinTech redefines the whole spectrum of how do we engage with customers.
