4 Ways Fintech has Reshaped the Financial Services Industry
We live in an era where the Internet and smartphone have become core elements of our lifestyle.
The rise of technologies like Mobile, Blockchain, AR, and VR has brought a whole new level of disruption to almost every industry and the finance industry is no exception.
Simply put, the digital revolution brought by the latest technologies has changed the way consumer’s access financial services today.
The intersection of finance and technology has accelerated the pace of change at such an incredible rate that it has successfully reshaped the finance industry’s status quo with Fintech.
What is FinTech?
Fintech is basically the new processes, applications, products, and business models in the financial services industry that aims to improve activities in the finance sector through technology and innovations.
In fact, Fintech startups have gained significant momentum in the past recent years, causing notable disruption to the traditional methods.
For instance, fundings received by FinTech startups in 2018 reached a whopping $111.8 billion, which is up by 120% compared to $50.8 billion received in 2017.
These FinTech startups have basically changed the way customers access financial services today. For example, nowadays people don’t prefer traditional financial services. Instead, they seek and use services that offer them a quick and prompt response.
That being said, let’s delve deeper and understand how FinTech is reshaping the future of the financial services industry.
1 – Smart Solutions
In today’s digital era, business is all about providing smart solutions to consumers. And this ever-growing need for smart solutions has forced the finance industry to come up with solutions that are robust, flexible, and quick.
Therefore, FinTech startups have developed highly effective solutions to replace traditional methods that had been neglected by the banks.
For example, the emergence of online platforms allows consumers as well as businesses to lend and borrow from each other. This lending and borrowing innovation has manifested alternative credit models using powerful data analytics to increase lending processes and lower the operational costs.
With this surge of technology-driven payment processes, FinTech is successfully facilitating easy payments and transfer of money using electronic devices.
2 – Redefining Customer Services
The finance and banking industry is all about driving customer satisfaction as higher as possible. To achieve this, FinTech startups offer 24/7 access to financial services via the Internet and mobility.
FinTech basically merges digital trends with customers’ expectations and empowers them digitally. Social Media, for example, is expected to become the primary source to connect, engage, and inform customers.
In fact, research shows that social media will be the main channel where consumers will research and compare different financial institutions’ offerings.
This research has also motivated banks to shift onto non-physical channels by incorporating the latest technologies and developing new methods to reach, engage, and retain customers.
While some segments in banking still demand human interactions for certain parts of the process, but the majority of consumers expect a digital solution from their banks.
Therefore, banks today also prioritize 24/7 customer services, which is often provided via social media and mobile applications.
3 – Insurance and Asset Management
FinTech has, without any doubt, caused a high level of disruption to the consumer banking and the lending and borrowing practices. And now, it is bringing another wave of disruption to the insurance and asset management sector.
Right now, the pace of change in the global insurance industry is being accelerated far more quickly than anyone imagined.
The investment industry, on the other hand, is also experiencing a powerful pull into the vortex of innovative technological developments.
The innovations in the equity crowdfunding and lending are providing quick access to asset classes which were previously unavailable to average individual investors.
Additionally, the emergence of data analytics in the Investment sector has also empowered firms to deliver custom products and automated investing.
4 – eWallet Solutions
The growing penetration of smartphone technology in our everyday lives has encouraged financial institutions to enter the mobile banking services through FinTech.
Also, since the number of unbanked and underbanked in developing countries is still high, mobile banking and eWallet solutions like PhonePe and M-Pesa are providing solutions to both these problems.
In fact, not these eWallet solutions are cheaper than traditional banks, but they’re also bringing more people under the basic financial services umbrella.
From an average consumer viewpoint, both mobile banking and eWallet solutions offer highly useful products with 24/7 customer service availability. And the best part is, both these solutions also eliminate the need for ‘middle man’, speeding up the transaction process as a result.
From FinTech startup viewpoint, on the hand, these solutions improve their customer satisfaction, engagement, and retention ratio, making this a win-win scenario.
FinTech is Leading Charge!
Smartphones, mobility solutions, and the Internet together are giving a new thrust to the FinTech adoption in the financial industry today.
In fact, as FinTech innovations continue to rise, banks and financial institutions will have to necessarily invest in emerging technologies to survive.
But, no matter how FinTech startups keep changing and setting new standards in the financial services industry, there is one aspect that will remain the same for succeeding in the market – It is that companies that meet customers’ ever-changing needs will be the ones that will succeed.
Overall, the paradigm has already been shifted. FinTech has proved to be a disrupting force in the finance sector and it will continue to do so in the coming years as well.
Bio: Atman Rathod is the Co-founder at CMARIX TechnoLabs Pvt. Ltd., a leading web and mobile app development company with 13+ years of experience. He loves to write about technology, startups, entrepreneurship and business. His creative abilities, academic track record and leadership skills made him one of the key industry influencers as well.