fintech innovationThere are a few people who believe and argue that the changes in the financial sector have been very slow as compared to the other sectors in spite of the technological advances made over the decades. They also suggest that with such a glacial pace of evolution, innovation is very hard to come by.

However, there are others who believe that changes are quite significant and it is more noticeable in the past few decades. Recent decades have witnessed the introduction of several useful and innovative technology solutions that have accelerated the transformation of consumer experience.

The most significant technological advancements that almost every person in this world is well acquainted is the Automated Teller Machine or ATM. Apart from that there are other significant and innovative technological solutions implemented that have made banking and financial service even better include:

  • Online banking and bill payment
  • Cashless transaction and paperless banking
  • Core banking system and
  • Mobile and internet banking.

All these have enhanced consumer experience in banking. Moreover, along with making payments and transactions safer and faster it has also resulted in the following:

  • Alleviated the operational costs
  • Increasing banking convenience and
  • Streamlined the entire process.

As the world started to recuperate from the shock of the great recession, there was the increase demand of convenience in banking from the people. This however did not make things better. In fact several technological advancements and its usage in the financial services raised the fear of disruption in service and operation in the banking industry. Some of the significant emergence of new technology presentations in self-service that resulted in disruption of services includes:

  • Online and mobile banking
  • Big Data
  • Machine learning and
  • Artificial Intelligence.

The seed of financial services disruption that is sown by these technological implications has raised the ever growing concern for the financial services firms.

According to a 2018 executive survey, it is found that nearly 80% of top executives in the financial service sector feared that their companies were at high risk of disruption of services and displacement from data driven and highly agile competitors.

Almost, three quarters of the respondent executives representing the largest financial services firms corroborated with the growing concern over disruption and potential displacement. All of them blamed the cumulative threat of infringement coming from the big tech giants such as:

  • Amazon
  • Google
  • Facebook and
  • Apple

Ideally, this disruption in financial services was felt gradually in the initial stages and then suddenly within the last few years.

Add to that, there is a new threat as well that is fuelling such disruptions. It is from the new wave of trendsetters who are opening up and providing a more capacious vision of financial services.

As consumers are expecting greater customization and personalization in financial services experience, these innovators are making the most use of the given situations. People are now moving away from the traditional lenders such as banks and other lines of credit and looking up for better loaning opportunity.

Emergence of Fin-Tech

Much of the revolutions in financial services in these days are being compelled by a new set of competitors such as the Fin-Tech startups.

Fin-Tech or Financial Technology is characterized as the drive that will bring disruptive as well as transformative innovation in the field of financial services. They will do this through the application of new and developing technologies. These technologies will help them to address all and varied type of consumer needs through automation.

On the other hand, the financial services firms may find it a bit difficult and constrained when it comes to using and focusing on the energies on initiatives for innovation. This is due to several factors but the most significant ones are the consolidation in the financial services industry as well as its regulatory constraints.

However, the Fin-Tech startups are better off since they have the advantage of not being laden by the legacy systems and its restrained processes. As a result, these Fin-Tech firms can move faster towards providing and developing easy and effective solutions.

Making the right choice

The consequence of this situation is the dilemma of the financial services firms who now have to make an informed choice between building their own capabilities and seeking out Fin-Tech partners so that they can drive innovation initiatives. This will help them to cope up with the high cost of customer acquisition as well as overcome the different and strict regulatory hurdles.

This situation has provided the Fin-Tech firms with an opportunity to provide novel applications either directly to their customers or in partnership with the large financial services institutions. On the other hand, the large financial institutions have to consider how quickly they can move to address the varied needs of their consumers in an industry which is ideally on the cusp of change. This change is brought in different forms such as:

  • Through partnerships with different firms
  • Acquisition or different firms and
  • By reformed internal initiatives.

However, most of the firms are more inclined to take a hybrid approach.

Future of Fin-Tech

FinTech helps in obtaining critical data and to build different products to test. It also helps to get the best solutions and to explore opportunities for partnership. It intends to accelerate development of products and service that has the potential to transform financial services with innovation at the edge. Since the Fin-Tech firms are not encumbered by legacy systems and its processes, they can provide faster solutions.

With all these advantages the future of Fin-Tech is bright and ripe for innovations with AI, machine learning, and Big Data. It has several opportunities to innovate such as:

  • Quantopian – A quant user sharing platform to develop and share algorithms to trade them on the market
  • Kensho: – An AI engine dedicated on putting analytics and data to non-technical users to provide data science to a greater financial services audience and
  • Elsen – A high performance computing engine that can process complex models of traders and hedge funds to provide results in minutes.

All this will help in overcoming the final barriers widespread business adoption.


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