The financial services industry is going through a paradigm shift. The evolution of FinTech has forced traditional financial institutions such as insurers, banks, and asset management companies to revamp their standard product, services, and business models that are no longer viable in the digital world. Consequently, they should consider replacing legacy infrastructure with newer and more efficient technologies.
Organizations need to reinvent what and how they do it. Be it providing new ways to augment customer experience, reacting to regulatory change (such as open banking), reinforcing new payments or digital models of delivery, or making service delivery quicker and more cost-effective, or enhancing the efficacy of back-office functions — the numerous FinTech solutions now available, or in the process of development, are aiding reinvent the financial services ecosystem.
According to a report shared by PwC, around 48% of financial services organizations have integrated FinTech into their strategic operating model entirely, and 37% have integrated new technologies into the products and services they trade.
In other words, the disruptive influence caused by FinTech is remarkable as it has revolutionized the way financial services react and operate with the changing customers’ expectations besides having a significant impact on the revenues of banks themselves. By providing businesses, especially SMEs, with 24/7 access and innovative services, which incumbent financial providers failed to deliver, FinTechs are witnessing steady growth.
Today, SMEs partner with FinTechs to help them with their financial needs, including securing working capital, evading foreign exchange risk, and handling cash flow. Apart from this, these firms can help them address their pain points, including billing, financing, payroll, and accounting, thereby freeing entrepreneurs to focus more on strategic business activities.
As FinTechs expand their offerings, they evolve as businesses, expanding their global reach — and impelling new competition. The steady growth of FinTech adoption has prompted traditional financial incumbents to respond by providing their offerings.
The Impact of FinTech
Advancement in technology is paving the way for FinTech innovation. Smartphones with 24/7 access allow SMEs to network and get better services augmented by disruptive technologies such as machine learning anytime and everywhere. With such developments in technology, cross-border transactions can be managed within a few clicks and at a considerably lower price. So, while lending has become less time-consuming and accessible, trading and raising capital has become global and simpler. Consumers are also taking delight in decreased product and management fees and targeted professional advice.
FinTech is the driver of revolution occurring in the financial services industry and has tremendous potential to change the socio-economic lives of people globally. With FinTech companies spearheading development in the financial sector, the financial services industry will reach the pinnacle of success soon.