Monday, January 4, 2016

How FinTech is changing Financial Services industry for better

In Financial Industry, FinTech has been one of most talked term in 2015 along with disruption, innovation & customer experience. Financial industry covers many financial services like banking, lending, payments, remittance, insurance, investments and trading services and has been using technology in a major way to serve its retail, HNI & corporate customers for many decades.
FinTech firms are the new breed of companies which apply new innovative business models & technologies to extend financial services to larger or new consumer segment in line with digital lifestyle or offer faster & exceptionally  better solutions to businesses. FinTech companies are fundamentally very different in their approach from traditional technology product / services companies as you can notice from few examples below.

Most FinTech firms are often driven by following principles

Democratisation: FinTech is leveling the financial playing field by making high-level, top-of-market services more accessible to all kinds of customers, not just institutional clients and high-net-worth individuals. WealthFront, NutMeg & Betterment provides access to high value investment services to thousands of new customers.

Disintermediation of traditional business models: FinTech is cutting out the middle man when it comes to making a financial transaction of any kind.  Prosper, LendingClub, SoFi in US, Zopa & FundingCircle in UK and Monexo in Hong Kong are already offering alternative lending options to consumers & businesses.

Customer experience:  FinTech is making banking to be as user-friendly as shopping or socializing have become. Moven & Simple banking Apps empower banking customers and gives them tools to control and manage their personal finances as they want. Fidor Bank in Germany is a trailblazing example in digital banking space. Venmo & SnapCash in personal payments and Xoom & TransferWise in Remittance have redefined customer experience.

Many new innovative solutions are being developed and offered by FinTech firms even in Asia such as digital debit/ credit card by MatchMove, Bitcoin based remittance services by BitSpark and group savings & borrowing solution by KyePot. Many FinTech startups are also leveraging big data and analytics to transform insurance services such as Heartisans of Hong Kong (generating early heart failure warning using data from fitness bands, thus enriching health risks assessment for policy underwriting)

FinTech firms are disrupting financial services industry and setting new standards for trust and transparency, efficiency and connectivity between consumers and businesses alike. An alternative finance industry though currently very small to traditional financial industry size is growing fast to provide access to high quality information, product & services meeting consumers new expectations.

FinTech solutions leveraging mobile technology are also making it feasible to widen reach of financial services to billions of unbanked people and empowering local SMEs to serve them better.

2015 has been a very good year for FinTech in Asia as it attracted almost $4 billion investment largely in payments & lending startups.

Hope 2016 will also drive even larger investments in FinTech start-ups & Innovative solutions to transform financial services for better.

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