FinTech (financial technology) is one of the most rapidly developing in the world.
Now, is the best time for FinTech. While banks are looking inward, thanks to the 2008 crisis, users are looking at their smartphones, eager to experience the digital financial services offered through MNOs, MVNOs and apps. So it’s no wonder that FinTech companies are on the rise.
The main factors of FinTech’s growing popularity are the availability of mobile internet and smartphones. dissatisfaction with banking services, and sometimes even the lack of these services, especially in the developing world.
- Financial Services and Social Media.
FinTech companies have already learned how to get and analyze information from Social Media – education, employment, friends, work, and how people spend their leisure time, including web activity.This data is used to perform scoring and offer customized services to potential clients. FinTech companies even started to offer chatbot technology, something that’s going to become a standard for customer service in helping to better inform and educate consumers.
- Alternative Types of Payments.
These include payment kiosks, contactless, mobile, and QR code payments, electronic and digital wallets as well as cryptography. New financial e-money providers, such as M-Pesa in Kenya and WeChat Pay and Alipay in China are helping to bring millions into the financial sector, all while improving access to a range of payment and financial services. International standards for QR code payments in markets such as India and China are offering a host of new opportunities to provide electronic payment access to millions of micro and small businesses that were too costly to make use of physical point-of-sale (POS) machines to accept plastic debit/credit cards.
There are three main payment channels based on market participants, and underlying funding mechanisms: B2C, C2C, B2B.
Regulation, demographics, and technology are affecting B2C and B2B in various ways. Technology is most actively shaping C2C payments while B2C and C2B have not been left behind with technology partnerships mushrooming across banks, enterprises, and startups. For instance, CreditPilot – a FinTech company that’s been in the B2B/B2C sector for nearly two decades, is currently developing a B2C payment method aggregator and extended distributed payment system set for launch in 2019. It includes e-Wallet, Blockchain transport, payment method aggregation, global payment remittance system and cryptocurrency capabilities.
- Marketplace Lending
The rise of non-bank lending providers allows for the origination of loans to clients through intermediary digital platforms, such as CreditPilot’s Any2Any – a peer-to-peer platform, that connect borrowers to investors.
- New business models.
With the development of service aggregator platforms, that offer users the most services at little or no cost, banks will need to change the conditions for their products – that means no more fees that cover costs for other services. Each service can independently generate profit for the bank, while remaining competitive on the market. Marketplaces that offer micro-lending are becoming direct competitors of banks, and with the edge of lower to no fees at all.
- Artificial intelligence:
Robots, chatbots and even robotic personal consultants that help automate many important banking services, including fraud prevention.
- Digital Identification and Biometrics.
The complexity of entering passwords and two-factor authentication codes deter many clients who would otherwise benefit from making use of new digital financial solutions. However, that can be solved. For instance, India’s introduction of its biometric Unified Payment Interface helped generate a 1,000% rise in digital payment transactions.
According to the World Retail Banking Report, “Given the pressures of cost, regulation and fast evolving customer expectations that banks are already struggling with, there is only so much that can be focused on at the same time. This makes the option of partnering with a FinTech highly attractive for banks.” This realization has opened the door for the emergence of platforms that bring together the customer and FinTech.