Technology related change is prevalent throughout the financial services industry, and as a result, FinTech is now globally mainstream. Fortunly has reported that 88% of incumbent financial institutions believe that at least a portion of their business will be lost to standalone FinTech companies in the next five years. However, both incumbents and innovators will benefit significantly from forging valuable partnerships to deliver growth and optimisation throughout the industry.
Within FinTech, many of the digital solutions address common challenges faced by finance teams and consumers alike. Some of the solutions capturing the public’s attention include mobile payments, blockchain, digital currencies, AI, and regulatory technology. Experts suggest that more will emerge in the years to come. The landscape is rapidly evolving, and the primary question people are asking is: what factors have enabled the rise of FinTech businesses?
- Streamlines Processes: The industry is undergoing what many are calling a “digital facelift.” Software as a Service (SaaS) companies have allowed finance professionals the opportunity to automate lengthy manual processes. FinTech is improving efficiencies by cutting out labour-intensive methods that are notoriously unreliable and costly. Automation has yielded a spike in productivity and thus, improved workflow – the overall aim is to optimise and streamline processes for finance teams.
- Cost-Efficient: A chief strategic objective for FinTech is to deliver on cost efficiencies. The pay-as-you-go model used with most companies has contributed to the growth of the sector. There is a reduced cost for innovation, as trailblazers can quickly test a broad range of solutions due to their flexible consumption business models and inherent affordability. Service delivery is quicker, and the newer and more efficient technologies are reinvigorating the value chain of financial services.
- Enhancing Capabilities: Cloud-based software heightens the capabilities of traditional finance and accounting professionals. This can help support finance professionals in the push to drive business growth. With enhanced capabilities comes more time to focus on the things that matter. The cutting-edge innovations are helping to establish a new way of doing business – complex processes are simplified, and FinTech tools allow teams to improve productivity.
- Driving Growth: Financial institutions that embrace FinTech will continue to grow and evolve. Remaining competitive in the ever-changing finance industry is a tall order, but one that incumbent institutions can’t shy away from. FinTech will play a central role in ensuring incumbent institutions continue to thrive – those who adopt the progressive technologies will remain relevant and competitive. To avoid playing catch-up, traditional services should incorporate advanced software solutions into the heart of their operating models.
- Customer Expectations: As with any industry, organisations must adapt to customer expectations to remain viable. Consumer preferences have influenced how financial institutions deliver their services. It is clear that consumer demand for innovation is driving the changes we are currently seeing in the finance industry. FinTech has disrupted traditional finance practices; service provisions are increasingly agile, personalised, and accessible.
Many factors are contributing to the rise of Fintech businesses. FinTech is making waves in the industry – now is the time for incumbents and innovators to join forces and grasp the opportunity presented by the rapidly growing sector. We expect to see greater collaboration between traditional finance businesses and start-ups. Both parties will benefit from leveraging each other’s knowledge and expertise, as they have highly complementary skill sets. As the FinTech ecosystem continues to develop, the sector’s growth is showing no signs of losing speed.