The fintech landscape

Fintech is an evolution of financial services directed by technology, changing customer expectations, availability of funding, and increasing support from governments and regulators.

Fintechs, businesses that adopt technology to rework or enable business and operating models within the financial services (FS) sector, have grown significantly in recent years.

Fintechs have seen on the brink of $1.5 billion in investments into banking, insurance, and asset management annually since 2014.

The growth of fintechs has been primarily driven by four factors.

  • Technological evolution: Fast pace of technological developments combined with the reduction in the cost of technology.
  • Emerging customer expectations: Customers now demand digital services and experiences almost like other sectors.
  • Availability of funding and capital: Funding into fintechs has increased significantly within the last several years.
  • Support from governments and regulators: Both governments and regulators recognize fintech because of the evolution of financial services and proactively support them.

Fintech focus areas in banking, insurance, and asset management.

Fintechs are challenging traditional business models across banking, insurance and asset management.

Banking: the most important share of fintech investment has been in banking, with payments and lending being the dominant area comprising approximately 65% of all banking fintech investments. Personal finance, peer-to-peer (P2P) services, money transfer, and trading platforms are other growth areas.

Insurance: Insurtech is increasingly attracting investment across distribution, underwriting and servicing. Fintechs provide innovative products like on-demand and P2P Insurance. Internet of Things (IoT) and analytics have also enabled the industry to supply new digital distribution platforms and simpler claims management.

Asset management: Fintechs are reforming how products are distributed, and advice is delivered in asset management.

Financial education: Fintechs have enabled the financial services industry to deliver tools to assist educate customers and manage their finances better.

Fintechs have implications for the consumers, government, regulators and therefore the industry.

Fintechs overall drive benefit to society.

Consumers: Fintech adoption has increased globally with a 3rd of consumers indicating they use a minimum of one non-traditional FS firm. While fintech requires digital capabilities, they significantly increase choice and value and empower consumers.

Government and regulators: As fintechs drive opportunities for economic process and consumers increasingly adopt them, governments and regulators are required to stay pace with technology and supply a regulatory environment that inspires innovation and ensures consumers are protected.

Financial services industry: Business and operating models of incumbents are challenged by new fintechs. Incumbents are required to embrace new technologies either through building capabilities or partnerships and acquisitions.

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