The FinTech sector has improved and expanded its offerings around the world, spurring change in the financial services market. FinTech is no longer simply a concept in the banking sector but has now become a familiar term in technology in general. Jason Simon, a specialist in the FinTech environment, explains how this new era affects global banking in different ways.
Global investments in FinTech startups have doubled to a whopping $112 billion, up from $51 billion last year. This is evidence that the digital revolution is at the doorstep of the financial sector.
This revolution brought about by more and more FinTech startups and FinTech banks is having a huge impact on all banks and financial institutions globally. Banks have a growing role to play in the innovation ecosystem if they know how to form strategic partnerships with FinTech startups, which come with the promise of disrupting the major players in the financial world.
“A big advantage of FinTech banks and FinTech startups is that the vast majority offer fee-free lending,” Simon points out. “Today, traditional banks are facing a major competitor, and they have stepped up their efforts by offering the ability to apply for personal loans over the Internet and with virtually no paperwork. They are trying to compete with FinTech.”
FinTech companies are driving changes in the market by focusing on emerging technologies that will provide a completely revamped experience for their customers. As existing players adapt to the market and begin to focus on these technologies, they will be able to move closer to FinTech, use the technologies to quickly adapt to the rapidly changing FinTech ecosystem and its regulations, and ultimately provide a better user experience.
It is important that you highlight some of the business pillars, such as wealth and asset management. This business area is home to banks and companies that offer advice to help people manage their wealth to meet a variety of objectives such as tax reduction, asset transfer, investment-based growth, or asset transfer.
Insurance is another option. Insurance companies are trying to stay on top of the changes in the market and close the gap with other financial industries that have increased their efforts. Insurtech is rapidly becoming an industry, but it still falls under the FinTech sector.
Simon explains that although insurance is slow to adopt new technologies, many FinTech startups are working with traditional insurers to automate processes and increase their services. The industry is embracing innovation, from mobile car insurance to wearables and health insurance.
The market will respond to the growing complexity of data and models that help to quantify and identify risk is also a key trend. Insurers are now embracing data analytics innovation and plan to invest in it over the next few years.
Then there are payments and transactions. In this area, Simon assures that “we find all the platforms to make balance inquiries, payments, and transfers over the Internet, without having to go to the physical branch.”
Although there are many banks that already offer this option, FinTech startups are the ones that are innovating the most in the sector. Sending money digitally to any part of the world couldn’t be easier.
Payments companies have been closely following the FinTech boom and the implications for their market. They are investing in technologies, such as data analytics, mobile, and cybersecurity, that reflect the most important trends in their industry. Payment companies are also investing significantly in blockchain technology and the vast majority have already adopted it into their system.