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In the past few years, the financial technology, or FinTech world, has grown by leaps and bounds, inevitably spurring innovation in the allied fields of blockchain, cashless transactions, and digital currencies. While the traditional banking system embraced the idea of digital financial services way before, this development has been largely driven by FinTech start-ups and budding financial services companies post the Great Repression of 2008.
Now, global finance events in cities like Vegas and Dubai aren’t considered complete without at least one discussion revolving around the FinTech arena and its future in the banking industry. It has slowly, but surely, become a part and parcel of our lives.
To understand the factors that led to its monumental rise, let’s go back a few years:
Factors Leading To The FinTech Revolution
The traditional banking world always adapted itself to innovations and new technologies with open arms, in order to make financial transactions quicker and more efficient for customers. However, the Great Recession resulted in a complete overhaul of its priorities.
Given the turn of events, banks had to ensure that they adhered to new regulations, deal with accusations of fraud and scams, and also take care of the heavy fines. In addition to this, there were also issues such as extremely high operating costs and a lack of ambition to go beyond the traditional customer base, thus resulting in this missed opportunity to participate in the FinTech revolution.
Parallelly, it was an exciting time to be in the digital world. Pathbreaking innovations were taking place, especially in the realm of mobile technologies. We are talking about the now-ubiquitous iPhone, and services such as Uber, and of course, Airbnb - things that we probably can’t do without in this day and age!
The banking industry could not keep up with the rapid changes and this was a major roadblock, given that payment gateways and money transfers were an absolute requirement for these services to work.
Recognizing a goldmine of opportunities, non-traditional players launched themselves right into this space. This is how the FinTech revolution bloomed. From budding start-ups to giants such as Facebook and Alibaba, everyone wanted a share of the pie!
How Will Banks Be Affected In The Future?
Banks are definitely worried that FinTech companies may succeed in grabbing a major chunk of their customer base, especially after the pandemic. As has been highlighted at post COVID finance conferences in Vegas, many peer-to-peer lending platforms already provide faster, cheaper alternatives to bank loans. Banks should be rightfully concerned as this has been one of the biggest revenue-generating avenues.
Thankfully, banks have taken on the challenge and have jumped back into the innovation bandwagon to stay relevant in this hyper-competitive, digital landscape.
Consumers are the biggest beneficiaries of the Great FinTech revolution. From convenience, ease of use, cost-effectiveness, and time savings, the benefits are endless. However, one should also consider the other side of FinTech and growing concerns around cybersecurity and scams when it comes to transactions.
The Money 2.0 Conference will take a deep dive into such concerns and their solutions, explore the major challenges facing FinTech companies, as well as new post-pandemic trends. Do make time for the conference if you would like to get a 360-degree view of the world of FinTech!