Fintech is a portmanteau of "finance" and "technology." It's an alternative term for financial technology, which includes blockchain technology, cryptocurrency, peer-to-peer lending, robo advice, cloud computing/storage, online security, mobile banking apps, etc. Fintech has been around for decades but has recently gained more popularity due to its role in disrupting the financial industry.
To become truly innovative, financial institutions need to ensure that they're not just providing great products and services, but also delivering a great customer experience. In this write-up, we will discuss innovative delivery methods for financial services that are possible because of advancements in fintech.
History of Innovative Evolution within the Global Fintech Ecosystem.
Fintech is an industry that has made significant progress in financial inclusion over the last 20 years. Fintech companies are using technology to provide banking services for under-served audiences at a lower cost than traditional providers. According to a report from the International Data Corporation, spending on fintech services worldwide has exceeded $200 billion by 2020.
Fintech is also expanding geographically into regions that have yet to see significant Fintech development. Africa, for instance, has seen increasing Fintech investment, increasing to more than $100 million in 2017, more than double the total from 2016.
Fintech and Innovation.
The Fintech industry has made great strides in product development and delivery methods. But technology innovation is only one-half of the equation. The other half is how we can deliver technology to consumers in innovative ways that improve their financial well-being and overall satisfaction.
The biggest example of Fintech innovation is blockchain technology, which underpins cryptocurrencies. Blockchain was first developed as the digital ledger system for Bitcoin transactions and is now applied to many different areas, including retail payments.
Blockchain provides financial services institutions (FSIs) with a more efficient way for customers to transact business and it can lower costs, increase security, and provide better protection for customer data. RFID integration is another innovative Fintech solution that has been used for financial inclusion in remote areas that lack banks or ATMs.
We are increasingly seeing financial technology companies delivering digital banking services through new technology platforms, such as virtual reality (VR). VR technology integration in the customer experience will soon become a major trend in technology service delivery.
Key Lessons Learned by Fintech Organizations.
Embrace agility in service delivery. Traditional service delivery systems are not nimble enough to meet the expectations of today's customers, who expect services immediately at their fingertips, from online banking to transfer funds.
In a world where everything is driven by cost-effectiveness, automation, and integration; the key for scaling is to meet the demands of an ever-growing customer base. Financial services can be delivered much more economically online or via mobile apps./p>
Identity verification remains a challenge across all industries. Fintech firms that can facilitate identity verification at scale will have a key advantage in the market going forward, as they work to partner with financial institutions.
Greater Control.Fintech has the potential to give customers greater control over their finances by providing convenient and cost-effective ways to access their accounts.
Online User Adoption. More and more customers are going online for a variety of needs. As of January 2021 there were 4.66 billion active internet users worldwide - 59.5 percent of the global population. Of this total, 92.6 percent (4.32 billion) accessed the internet via mobile devices. In parallel to this adoption growth user expectations are also changing rapidly demaning a seamless, secure and frictionless experience every time. Fintech firms that can provide 24/7 secure digital interaction will have an edge in the market.
Importance of Fintech Innovations.
Millions of people around the world lack access to basic financial services. Understanding how Fintech innovations can benefit the most underbanked is key to maintaining momentum in this industry. A recent study by Accenture found that Fintech companies have created new ways for the unbanked and underbanked to save, borrow money, pay their bills, and access cash.
At the same time, Fintech has begun to offer innovative new services that help customers improve their financial well-being. Fintech innovations are also helping people increase their financial literacy by making it easier for them to learn about finances and make positive changes in areas such as budgeting.
In regions where people do not have trust in traditional banking systems or basic financial services, Fintech can offer solutions that make it easier for them to save and borrow.
Evolution of Fintech Innovations.
In the last 20 years, Fintech firms have been making major strides in improving financial inclusion through digital P2P-lending platforms, mobile banking offerings, and blockchain technology designed to expedite transactions. Mobile device adoption in emerging markets has been driving the need for better solutions that can help customers manage their money on the go.
In developing countries, there is a huge demand for alternative credit scoring systems to provide customers with access to loans when banks are not willing or able to serve them. Fintech players are also introducing innovative solutions that will continue to benefit the underbanked and unbanked. In emerging markets where cryptocurrency has been embraced as a viable solution for money transfer. Blockchain technology is another area that has become of interest to Fintech companies looking for ways to serve the underbanked.
At the same time, Fintech has introduced new ways for individuals to access financing through digital channels. Increased adoption of innovative solutions designed specifically with financial inclusion in mind is expected to drive market share higher for Fintech companies.
The Future of Fintech.
Fintech is a dynamic industry that will continue to evolve as companies work to bring innovative solutions to the market that meet customer demands. As adoption rates rise among the global consumer base, Fintech will continue to play a key role in how individuals manage personal finances.
Fintech companies such as Connect Financial are expected to continue leveraging blockchain technology to develop new cryptocurrency solutions that improve the management of digital assets while making it easier for people to pay their bills and transfer money. The introduction of digital wallets, savings wallets, investment wallets, and crypto credit cards are also prominent examples.
Connect Financial brings the world’s first crypto-backed credit card, powered by your cyrpto holdings with zero-touch on your coin value. Allowing individuals anywhere to receive the credit they need without the complicated and lengthy application process or credit. Paired with an array of digital wallets to hold fiat, buy and sell coins, borrow against your digital assets or earn on your crypto. Everything one would need to enjoy financial freedom, flexibility and their crypto in their everyday lives.
Fintech revolutionized the way people manage their money and interact with financial service providers. At the same time, the continued growth of Fintech will contribute to the expansion of global financial inclusion by helping more people across the world get access to necessary banking services.