28 Feb Fintech Advances Financial Services in 2018
It’s Time to Add Fintech to Your Vocabulary
Fintech, otherwise known as financial technology, is a term used to define computer programs and technology whose objective is to support and enable financial services. Fintech has already created rapid growth for banking IT service providers and continues to drive the financial industry forward as we progress further into 2018.
The key drivers behind the Fintech industry’s growth so far have been digitization, the expansion of technology innovation, and the demands of millennials for frictionless mobile solutions in financial service. Cody Green dives deeper into these drivers.
- Resisting complacency by continuously improving the user experience is essential for fintech companies to sustain their rapid growth. Giving customers what they want also means fintech companies should avoid forcing new technology on consumers.
- The challenge for the fintech industry remains the cost of borrowing money, which is not a barrier for banks. However, fintech companies can stay ahead of banks if they leverage multiple sources of money.
- Fintech companies are agile and are willing to take on risk. They need to work with multiple financial institutions to secure funding, and they are not tied to legacy information systems and processes. Evolving their business or reinventing themselves is also easy and doing so can help them bridge different industries.
- Looking beyond our industry for consumer-centric companies leading the way, American electronic commerce and cloud computing company Amazon is making impressive strides by constantly making their service easier and better for consumers. As a result, Amazon is widening the gap in e-commerce over their retail competition, while bridging industries as a logistics player.
- Similarly, by focusing on giving customers what they want and constantly improving the consumer experience, fintech companies will continue to thrive instead of fold.
From disruptive threat to enabling partners, Fintech has entered a new phase of its evolution. It’s making financial services faster, cost-effective, and more efficient. Here are seven examples:
- Digital Currency is not Going Anywhere – While bitcoin will have a long way to go before universal acceptance like fiat currencies, it seems to be getting there, fast.
- Bitcoin as Peer-to-Peer Remittance – As compared to traditional remittance services, bitcoin remittances fees are much more affordable and the funds transfer time ranges from instant to mere hours instead of days.
- Hybrid Global Financial Platforms – There are now financial platforms that specifically support both crypto and fiat currencies, these have a global audience.
- Robo-Advisors – Robo-advisors are fund managers without the high commission rate.
- Search Engines for Financial Information – This has significantly reduced the time that finance professionals need to conduct research, which should lead to price slashing in financial advice services.
- Exchange-Traded Funds are Everywhere – ETFs are cheaper to manage and hold, easier than buying individual stocks, as diverse as mutual funds, and offer many thematic industries that are appealing to new investors.
- Non-Bank, Peer-to-Peer Lending Marketplace – Individuals and small businesses can now get access to funding from individuals through P2P lending marketplace, where multiple lending platforms now exist to connect borrowers and lenders.
Customer service in financial services has also been greatly impacted. The customer journey is important for every industry and the Financial Services sector is no exception. In fact, banking has suffered from negative customer perceptions associated with poor service and a lack of customer centricity more than many industries. Bill Safran provides further insight:
Historically, banks have been perceived to be inward focused, trying to make the customer fit around their internal processes and legacy systems. This is now changing, and banks are increasingly realizing that customer service and customer experience can be used as ways to differentiate their offering, both to attract and retain customers.
The ideal strategy is for Financial Service organizations is to provide a range of channels and then allow the consumer to select which channel they want to use. It’s also about allowing customers to move seamlessly between these channels. For example, a customer might choose to start a digital loan application journey but may encounter a problem in that journey such as a problem with the application form or a failed credit check. At that point in the journey, the customer may want the help of a human to get them back on track and this is where the organization needs to provide the option of an assisted channel, as well as a seamless transition between the two channels.
Technology has enabled customers to connect with banks from a variety of platforms including computers, tablets, and mobile phones, as well as in person at a bank branch. So mobile banking software and Software as a Service (SaaS) solutions, enable the kind of customer experience that digital transformation demands.
There is also no doubt that Artificial Intelligence (AI) has a role to play in banking. We have seen AI be successful across simple customer journeys and transactions that have a reasonably linear path with little emotional impact. However, AI is not the Holy Grail…and we believe the best way of using these tools is for a financial advisor to provide a better level of service to customers by leveraging AI data and thereby still including a human touch.
As a way to ensure optimal security for each location, the human touch also plays a large role in developing biometric platforms that are gaining momentum in the banking industry. Along with blockchain innovation, Ieva Strupule dives deeper into the role biometric authentication has taken within this industry:
Blockchain (Tech Innovation)
Big corporates and banks are looking at ways of implementing blockchain into their internal systems in order to adopt a decentralized structure and cut third-party related costs. Corporate giants like Deloitte announced a partnership with Stellar already back in 2016 and leading banks like UBS, Banco Santander and Unicredit whose investment recently made headlines for Ripple, are all aiming to remain at the forefront of innovation and hence, are heavily investing in building their own blockchain based solutions.
Biometric Authentication (Security)
In addition to the skyrocketing fame of blockchain based solutions and regulatory enhancements in banking, new security measures must be implemented. PIN codes are outdated and no longer a viable solution for the fast growing and ever changing financial industry. I have to agree with Goode Intelligence consultancy, who predict that by 2020, biometrics will be the predominant method of identification in banking. Biometric authentication, such as fingerprint, vein pattern, face and voice recognition has been largely adopted in the banking scene already and according to the research carried out by Equifax, possibly due to major data breach and hacking scandals, users are willing to use biometric methods to access their accounts. I am certain that we will see a global trend of banks adopting biometric authentication already in 2018.
Along with biometric security authentication, the banking industry experiences a need for an overall electronic security solution to ensure the technology they are incorporating provides the reliability needed for financial providers to progress successfully.
How have you seen fintech advancing your business? Let us know in the comments below.
Marketing Content Specialist at Comm-Works
Matthew currently serves as the Marketing Content Specialist for Comm-Works. He possesses experience in the marketing and communications space, and has worked in a variety of fields including technology, health, and franchising. He holds his Bachelor of Science in Marketing and Mass Communications from St. Cloud State University in MN and in his spare time, you’ll find him swimming, cooking, and spending time outdoors.