From cloud computing, market automation to autonomous cars and robots with human emotions, technology has transformed the corporate world. And now, it is taking over the financial industry too. According to EY’s Fintech Adoption Index, the financial technology is thriving globally and has received over $17.4 billion in investment last year alone. But, what is FinTech exactly? Is it just a group of financial companies using technology? Or, is it start-ups which develop innovative technological solutions such as faster and easier payments online, big data and much more?
Here, iTMunch will help you get a better understanding of this rapidly evolving industry:
What is FinTech?
The abbreviation for Financial Technology, FinTech, is a category that refers to using technology innovatively in the design and delivery of financial services and products. FinTech can be used for various business segments, which include lending, investment management and payments. Those engaged in this industry develop technologies that can put an end to the traditional practices, processes and tools in the financial sector.
Who is active in FinTech?
This industry is not just limited to traditional finance companies but also start-ups. The latter often develops targeted solutions for the audience instead of just being a one-stop-shop for fulfilling financial requirements.
Five facts about FinTech:
1. Since 2008, global investment in this industry has increased from $928 million to $2.97 billion.
2. 43.4% of people who use Fintech services choose to do so because of ease of access.
3. 35% of banking revenues can be at risk by 2020 because of disruption from FinTech.
4. With 53% of all the European deals, London has become the FinTech capital of Europe.
5. One-third of consumers across the globe are using two or more than two services offered by this sector (Woods T, 2014).
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Most used FinTech Services:
a. Money transfer and payments (50%)- Includes everything from online foreign exchange, mobile phone payments to payment via cryptocurrency and overseas remittances
b. Insurance (24%)- Mostly used for car insurance, and activity-based health insurance
c. Savings and investment (20%) – Used for online stock-broking, spread-betting, and investments in crowd-funding platforms.
How can FinTech benefit businesses?
1. Improve customer satisfaction by providing easy-to-use payment platforms
2. Streamline your own payment efforts
3. Cater to millennials by offering online banking, automatic savings and others
Top Six Areas in Fintech that are most favourable:
1. Digital Currencies
2. Blockchain
3. Capital market
4. SMB Tools
5. Retail Investment
6. Lending
Key trends to watch out for in 2018:
• Diversification of cryptocurrencies
The digital currencies have been around for quite some time now, with Bitcoin alone increasing exponentially. Because of that, many individuals are expected to launch their own cryptocurrencies using Initial Coin Offerings. This gives consumers and investors a wide range to choose which digital currency to use.
• More emphasis on data analytics and AI
As consumers expect solutions that cater to their requirements, FinTech companies are expected to make use of data analytics and AI to understand these requirements.
• More companies and fewer start-ups
The time is gradually changing and it is not only the start-ups that are in the race to provide technological solutions but also the established firms. This competition is expected to foster innovation and provide their absolute best!(Paine J, 2017).
This is all you should know about the current financial industry! Keep reading iTMunch for more such finance-related blogs!
Sources:
- EY FinTech Adoption Index 2017, “EY FinTech Adoption Index 2017” [online] available from: http://www.ey.com/gl/en/industries/financial-services/ey-fintech-adoption-index [accessed January 2018]
- Woods T, 2014, “10 Fintech Facts You Probably Didn’t Know” Kantox [online] available from:https://www.kantox.com/en/10-fintech-facts-probably-didnt-know/ [accessed January 2018]
- Paine J, 2017, “Keep Your Eye on These 5 Fintech Trends in 2018” Inc. [online] available from: https://www.inc.com/james-paine/five-fintech-trends-to-watch-in-2018.html [accessed January 2018]
