Insights

A traditional business owner asked an Analyst: Describe Fintech. In simplicity he explained that broadly, financial services industry can be dissected into three segments: raising capital segment, allocation of capital segment and transferring capital segment.

Fintech enables process automation in the described segments of the financial sector using various technologies that transform and innovate routine, manual tasks to non-routine, cognitive decision making.

Redrawn from the competitive landscape, Fintech is seen driving internal and external innovations by increased fintech partnerships in the financial services industry. The success of Fintech is observed in the changing trends that reveal fintech disruption is powered by reduced cost of intermediation and a push by the millennial thinking about customer experience and customer centricity.

Common characteristics that can be observed in successful fintech applications include that fintech follow a multidisciplinary workforce model to combat bottlenecks(related to big data and computations) and design an advantage model for customer acquisition.

They are commonly seen capitalising on the innovative uses of data. Mostly, fintech’s have segment specific propositions that leverages existing infrastructure where model development is basis theoretical foundations. The successful fintech’s create a unique value proposition that centres around a well defined problem statement. As slowly funding is seen moving to mainstream investors from dominant venture capitalists in fintech, it is key to understand the philosophy encouraging the fintech world- ‘collaboration than competition’.

Financial institutions are making increased internal efforts to innovate.

The areas impacted the most in businesses from Fintech includes meeting changing customer needs by new offerings, leveraging existing data and analytics, enhancing interactions to building trusted relationships and enhancing the business’ operational capabilities.

Some of the common new technologies that are reshaping value proposition of existing financial products and services include Bigdata, Artificial Intelligence, Blockchain, Biometrics, Identity Management and Integrating legacy systems with data analytics and mobile technologies. Consumer banking followed by funds transfer are likely said to be most disrupted sectors with regards to fintech by 2020. Fintech blooms in an environment where capital, talent and tech connects with the regulators and the governments. The idea is to progress while managing risks and regulatory stakeholders as Fintech is strongly formative as a concept. A regulatory barrier to innovation is this sector is the fact that legislation is not keeping pace. This space has given birth to the foundations of RegTech. RegTech focuses on rapid addressal of regulatory requirements and ensure compliance with regulatory developments.

Boosted RegTech funding are in Data Storage, Privacy and Protections laws and compliances and largely digital identification authentication such as in the case of AML/KYC issues. Majority of the fintech are regulated in sectors such as online investments, consumer finance lending, and digital banking, however, sectors such as financial software, supply chain solutions, cryptocurrency, blockchain etc. contain the fewest number of regulated fintechs.

Majority of the fintech are regulated in sectors such as online investments, consumer finance lending, and digital banking, however, sectors such as financial software, supply chain solutions, cryptocurrency, blockchain etc. contain the fewest number of regulated fintechs.