Financial Technology

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Tag: FinTech Jacob Parker-Bowles

Should You Update your Approach to Fintech?

If you work in the banking industry, you may want to take a page from the fintech book. When a commercial bank introduces a new financial product, it’s the result of six months or more of planning. Fintech operates a little differently, with new products and services launched for public consumption almost as soon as the idea is approved. The speed at which new fintech products and services are introduced helps those companies to stay ahead of competitors, such as traditional banks.

Looking Toward the 4th Industrial Revolution
While a new industrial revolution was already well on its way, the Covid-19 pandemic sped up the evolution of our society. A need for more remote services introduced advances in digitization. This created a need for new infrastructures in every industry, including the banking and financial fields. While banks still have to work with regulatory agencies, those agencies will be forced to loosen their restrictions to help banks compete with fintech companies. Fewer regulations will help traditional banks remain competitive as fintech changes how consumers manage their money.

Banks will also have to change. Rather than waiting to offer new services after competing financial institutions have already offered them, traditional banks will have to be at the forefront of innovation. By taking the risks of offering new technology-based services first, these institutions can gain a much-needed competitive edge. They will also be able to provide better service to their customers.

Fintech Isn’t the Enemy
While banks do compete with fintech companies, a forward-looking bank will instead reach out to those companies to form partnerships. By incorporating fintech products and services into your bank, you can offer more state-of-the-art services to your customers. Many tech-savvy consumers will look for fintech that interests them. By offering those innovations, you will encourage those consumers to conduct their finances with your institution.

It Will Take Work
Adding fintech services for your customers will still come at a cost, but you should look at this as an investment in the future of your bank. You’ll have to enhance your bank’s infrastructure to accommodate new technology.

You may also need to reorganize how you utilize personnel. Rather than assigning one or two people to perform specific tasks, your fintech-friendly bank will operate more efficiently through the use of teams. A team-based structure will promote a greater emphasis on customer satisfaction, while also helping team members to strengthen their expertise and develop new skills.

How Competitive is Fintech?

The past decade might be called “the Rise of Fintech.” The coming decade may just very well be called “The Age of Fintech.”

Fintech, short for financial technology, has exploded across the globe and asserted itself as one of the most powerful sectors in commerce and business development. Already, a remarkable 64% of world consumers are now using at least one form of fintech product.

That’s exciting for investors and developers. However, tens of thousands of entrepreneurs are jumping in as they hope to create the next great fintech app and get their slice of the pie.

That means fintech is getting crowded and more competitive month by month. Keep in mind, however, that the issue of “competition” is a multilayered and multidimensional quality.

That is, fintech competition is not only heating up between new start-up entities. It is also challenging old institutions, such as legacy banks and financial institutions.

To the latter, fintech is a threat to “business-as-usual.” That’s because fintech naturally competes with traditional banks in numerous ways. Take crowdfunding, for example. This new tech-enabled form of raising cash for business start-ups cuts banks right out of the picture.

Today, even a person with dicey credit can launch a campaign on Kickstarter and go directly to tens of thousands of small investors to get the cash they need. One also can bypass a bank for obtaining basic tools, like a checking account or a merchant account for business. These needs are easily handled by simple and inexpensive-to-use fintech apps.

Be aware that the degree of competition among new fintech firms varies greatly by geography and against the relative maturity of established financial institutions.

Speaking of “established financial institutions,” that is probably the way we can define PayPal today. But just a few years ago, PayPal was one of the early services that could be truly defined as fintech and stood nearly alone. Today it faces fierce competition from numerous players both big and small.

Just a few examples of PayPal’s competition are Google Wallet, Payoneer, Wepay, 2Checkout, Authorize.net, Skrill, Intuit, Propay, Dwolla – and that’s just for starters.

So yes, fintech remains hot -– and a hot market means stiff competition.

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