There always has been a conspiracy that bankers secretly run the world, probably because money is an integral part of our lives and lies at the heart of our civilization, and everyone wants more of it. Consequently, most of our decisions are aimed towards improving our financial situation. Money, on the other hand, offers you utility, convenience, and a better quality of life. Given that technology is the primary source of utility in today's society and is improving at a breakneck speed, there might be a tie between financial institutions and tech giants when it comes to running the world.
Obviously, it was a light-hearted portrayal of today's society. However, our lives are becoming more and more dependent on technology, and finances lie at the heart of any corporation. Consequently, FinTech, which amalgamates both money and technology, has seen a surge in popularity in recent years.
FinTech: Meaning, Use, and Impact
The term "FinTech" is formed by coining two terms together: financial services and digital technology. FinTech refers to the technology to improve and automate the delivery and use of financial services. Fintech, at the lowest level, assists organizations, company owners, and individuals in better managing their financial operations through the use of specialized software and algorithms that run on computers and, as of today, even smartphones.
In essence, FinTech encourages companies to develop novel goods and services using digital technology, such as online banking, mobile payments, alternative finance, big data, and total financial management. The development of cryptocurrencies is another aspect of fintech.
FinTech vs Banking
Although FinTech and Banks both strive to provide flawless financial services to their customers, there are distinct differences between the ways they achieve that. Banks focus on security and risk management, while fintech businesses focus on making the client experience smooth through ease, functionality, personalization, and accessibility.
Fintech has a greater marketplace due to the utilization of technological trends and breakthroughs such as smartphones. Banks, on the other hand, have a narrow market distribution.
Fintech features organizational structures that are less resistant to trends, allowing for more innovation. Banks, on the other hand, have a rigid organizational framework that may limit the speed with which innovative improvements are implemented.
Banks target consumers with proven track records and strong credit ratings, whereas fintech targets the unbankable, such as those with low credit scores.
Bank CEOs Running Technology Companies?
With technological advances, the public demand for convenience in the financial sector arose, and the arrival of contemporary methods aligned with technology swayed many customers to the new and improved setup. Consequently, the banks and financial service providers had to change their infrastructure to incorporate as much digitization as possible.
It is no wonder that in such circumstances, banks have mimicked the FinTech companies so much that they are left in-between the financial and technological sphere. Bill Winters, Chief Executive of Standard Chartered, rightfully says that CEOs of financial institutions now consider themselves to be in charge of technology businesses as much as they do of financial institutions.
Role of FinTech in Banking
The most well-known (and well-funded) fintech startups all have one thing in common: they're built to pose a threat to, challenge, and gradually usurp established conventional banking providers by being more flexible, serving an unserved segment, or providing quicker and/or better service.
In short, if you've ever wondered why a particular aspect of your financial life was so unpleasant (for example, applying for a mortgage with a traditional lender) or felt that something wasn't quite right, fintech is sure to have (or be developing on) a remedy. Fintech, for example, aims to mitigate issues like the assessment of creditworthiness through your FICO scores.
Fintech today refers to a variety of financial activities that can be performed without the assistance of a person, such as money transfers, depositing/cashing a cheque with your smartphone, avoiding a bank office to apply for credit, obtaining funds for a commercial startup, or managing your investments. EY's 2017 FinTech Adoption Index indicated that 1/3 of the total customers used at least two (if not more) FinTech services. The remarkable thing is that these customers, just like many other users, were aware of FinTech companies being a part of their daily life.
FinTech in Banking in India
FinTech is no longer a catchphrase in the banking industry buzzword. Instead, in the realm of technology and finance both, it has become a widespread terminology. Global investments in FinTech businesses have more than doubled to $112 billion, up from $51 billion last year. It is more than enough evidence that the financial services industry is to undergo a digital transformation.
One of the primary reasons for the success of FinTech companies in India is that these corporations have successfully incorporated technology into the financial proceedings without sacrificing security.
This sector has reached its current level as a result of a series of carefully planned initiatives aimed at improving safety and utility.
Smart Chip Technology
Omni-channel & branchless banking
Customer service chatbots
Artificial intelligence (AI)
With all of the preceding factors in mind, it's no surprise that FinTech is not only eroding traditional banking markets but is also threatening to dominate the financial services sector. Traditional banks, on the other hand, have been more receptive to technology as a result of this initiative. Overall, this mini-war has created healthy competition, and the actual winners are the customers who are continually receiving upgrades.
But one concern remains: which of these FinTech firms is truly trustworthy?
Visit synlabs.io if you need help navigating the FinTech market or need FinTech solutions for your startup.
SynergyLabs is a cutting-edge technology consulting organization specializing in the development of enterprise-grade solutions for fintech startups, including ready-to-deploy PODs. Founded in 2017, it is a well-funded startup that assists FinTech companies in speeding their growth by delivering robust and scalable solutions. It provides BFSI (Banking, Finance, and Insurance), logistics, retail, and telecommunications services.
If you're a FinTech startup or company looking to develop cutting-edge solutions, send us an email at firstname.lastname@example.org to learn more about what we can do for you.