Fintech is the key, and it's among the most energetic, rapidly growing of all the technology sectors. It's affecting how we spend, save, borrow and even define our money. The days of physical cash – and arguably physical cashiers – are numbered, and the very concept of currency itself is shifting and broadening.
The machinery of traditional banking really isn't geared for this accelerating change of pace. Fintech moves fast and travels light. Moreover, it sets its focus ahead - on its end users, rather than the organisations behind it.
A typical Fintech app (if such a thing even exists) lives on your phone, and probably knows a lot more about you than your local bank manager does. The electronic banking offerings from traditional banks still tend to be cumbersome to use, often hiding their features and functions behind walls of text that the customer must scale – and scale, of course, is a big part of the problem here. When a lumbering financial titan designs a website or application, it tends to think first about what it wants to accomplish using its existing range of capabilities and services. It asks, “How can we make more of what we already have?”
By contrast, the focus of work at the cutting edge of Fintech is on determining what the customer actually wants, and then honing in on an approach that answers that specific demand.
Fintech apps are unshackled from the weight of traditional banking thinking, methods and technologies. They're also making the most of what's ,so far, been a relatively light regulatory framework, which only adds to the agility and speed with which they can put their ideas into motion.
Fintech firms are often relatively asset-slim – and while that comes with obvious dangers, management of risk has always been one of the skeleton keys to unlocking successful innovation. This territory is home turf to Fintech's upstart start-ups.
As to what consumers actually want from the financial tools in their pockets, security typically tops the list. While that's not a surprise, its something any financial business needs to keep at the forefront of its planning. Winning the trust battle is essential. Beyond that, though, the surveys show that people want a personalised service they keeps them in control of their cash. That means personal financial management options, the ability to make easy mobile payments and the death of the one-size-fits all user experience.
So if this is starting to sound like the end of banking as we know it, it's worth remembering that even though the more traditional organisations in the sector aren't always quick off the mark, they're definitely paying attention.
Some of Fintech's most significant backers have deep pockets and deeper roots in traditional banking. By 2022, predictions are showing that European banking institutions will be pumping about a third of their IT budgets into new Fintech projects.
While the giants are understandably cautious about rocking their boats too hard too soon, attention and resources are steadily shifting toward exploring the new landscape of financial technologies. The research shows that people will overwhelmingly welcome innovative Fintech offerings from familiar banking names in preference to untested newcomers. However, with the big banks lagging behind, the battlefield's wide open for the fastest thinkers and movers.
With alternative finance, the sharing economy and cryptocurrencies shaking up the ways people and businesses transact, it was perhaps inevitable that interest would start to be shown by bigger firms not usually associated with banking.
With huge names like Amazon, Apple, Google and even Facebook dipping their toes into the Fintech waters, we're on the verge of a potentially huge shift in the role of familiar retail banks. These newcomers to the financial sector already have tremendous muscle behind them and phenomenal technological expertise to lean on.
Apple has well over a billion active users around the world, outstripping even the largest of banks by a huge margin. Their Apple Card claims to be a total rethink of the humble credit card, speaking directly to user concerns by making it easy for them to understand their spending, gain daily rewards and manage the interest they're racking up.
Google Pay's been around since 2015 and boasts slick features like tap-to-pay and simple peer-to-peer payments. Integration with Google's AI systems opens up the prospect of a practically hands-free approach to your personal finances and even debt management.
Meanwhile, Amazon's assault on the banking sector has been full-blooded, with payment services, insurance, credit cards and even business lending services in its sights.
As for Facebook, the social media behemoth's been sniffing around the financial sector for a while. Right now, for example, it's rethinking plans for its Libra cryptocurrency because of pressure from regulators and resistance from politicians around the world. In August 2019, the UK Information Commissioner was among many authoritative voices expressing concern about Libra's privacy implications.
The challenges for Fintech firms of any size are essentially the same. Securing trust is a key concern – and one that even some of the sector's biggest names often struggle with. Facebook's apparent inability, for instance, to control the flood of fake news and other harmful material on its platform doesn't necessarily say anything bad about its reliability as a banking organisation. In the eyes of many of its users, though, it definitely doesn't say anything good about it.
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