Guide to the Fintech World: 5 things that are trending now

Financial Technology or fintech refers to the combination of financial services and technology, which has changed the way how the financial companies used to operate, collaborate and transact with their clients, other industries and regulator.

In this era, most of the companies, irrespective of their size have started using fintech. Many variations of financial technology have emerged like regtech (regulatory technology) and insuretech (insurance technology).

There was a time when financial services companies and technology, media and telecom companies used to operate parallelly to each other. But with time, these tows started crossing paths, i.e. many technology, media and telecommunications companies are applying for the financial services license, and financial services companies have started calling themselves technology companies. All thanks to the financial technology which has minimised the gap in between these businesses by bringing transformation.

Financial technology is being used by financial services as well as technology, media and telecom industries to improve their operational efficiency, cost reduction, enhance their client experience and improve the exposure of their products and services.

Banking sectors are using financial technology to improve customer experience. Digital-only banks are providing improved client proposals as well as cost profiles. Now, robo advisors are also coming into the picture, which is a digital platform that offers automated, algorithm-driven financial planning services and requires less human interference. The insurance companies are also using sensors to check the individual’s health and help them to prevent illness.

Recently PWC conducted a survey, in which more than 500 financial services and executives around the world from Technology, Media and Telecom were surveyed, and their responses were analysed. Based on the responses PwC believes that the companies will not only embrace fintech-driven business models but would also look how to traverse wider and busier lanes with methods that make the most of the combined strength of financial services and technology, media and telecommunications sectors.

Key Findings from the Survey:

-Â Â Â Â Â Â Â Â Â The study based on the survey responses proved that 48% of the financial services companies and 47% of companies from technology, media and telecommunication had included financial technology completely into their strategic operating model. Also, emerging technologies have been incorporated by 44% of technology, media and telecom companies and 37% of financial services companies in their product and services.

-Â Â Â Â Â Â Â Â Â Both the segment, financial services and technology, media and telecommunication should look for ideas to make the best use of the financial services. These segments should look at each other and retrain to fill skills gaps.

-Â Â Â Â Â Â Â Â Â Financial services companies are trying to improve their technology capabilities, and technology, media and telecommunication require expertise in product and regulatory to compete in the financial services market, PwC thinks that the firms should engage in more cross-sector fusion. As of now, 78% of technology, media and telecommunication and 76% of financial services firms are aiming businesses via acquisition, strategic alliance or JV to drive growth and development within their own sectors. Less than 50% of companies belonging to financial services as well as technology, media and telecommunication are seeking for those companies that specialise in fintech.

After having an idea of the financial technology companies, let’s look at the areas where the financial technology is trending.

Banking on the go:

The advent of fintech has increased the number of mobile users who are accessing banking and financial services due to convenient, fast and secure mobile technology.

Artificial Intelligence:

Artificial intelligence is another area which is creating a lot of buzzes. Through Artificial Intelligence, banking and financial operations have got simplified. AI has helped in data collection, analysis and helped clients to make a better investment decision as per their income and expenses.

Virtual Banks:

Fintech has given rise to virtual banking. With the easy internet access followed by two-factor authentication technique, days are not far when the number of virtual banks will increase in the future and will be a threat to physical and conventional banks.

Blockchain:

Blockchain plays an important role in financial services. Blockchain which forms a part of the disruptive ledger technology is capable of transforming well-established financial institutions and helping them to reduce cost, facilitates the execution of a faster and safer transaction, enhanced transparency and many other benefits.

Changing face of investment advisory:

Fintech has its presence in stock trading and robo-advice. Robo-advisers which are digital based financial advisors, customers are able to get financial advice with efficiency and at a lower cost. Robo-advisors provide customised investment plans based on investor’s risk appetite, age, personal assets etc.

Fintech Outlook:

As per the report released by PwC, Financial technology in 2020 would be driving the new business model. Lending industry is going to be one area where a lot of Fintech initiatives will be seen in 2020. Fintech is expected to focus on how to reduce the non-performing assets and to develop services to enhance credit recovery.

In 2020, financial technology would be heading towards the growth of Neobanking and banking as a service platform, tokenisation, innovation in cloud, experiments to continue with robotic process automation. Robo advisors will gain grounds, and next-generation payment would grow. There would also be a rise of new fintech players targeting niche segment agriculture and supply chain in the B2B segment.

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