Transforming financial services
Technology has transformed the financial services industry (FSI) over recent years, and we are now used to hearing the word fintech to cover all kinds of payment and transaction services online, in apps and on our phones. Dramatic changes in the way in which we use telephones, computers and information technology mean how we pay for goods and services bears little resemblance to how we did it even as little as ten years ago. If we go back slightly further than that, processes are almost unrecognizable.
Online payments. Image credit: salcapolupo via Pixabay, CC0 Public Domain
Most of us do not even think about our myriad choices when making purchases, nor the speed at which transactions now happen. It was not so long ago that it was normal to wait for days on end for payments to clear in and out of accounts and for there to be genuine concern about the security of online transactions. While criminals always seek to defraud people, constant innovation has kept financial institutions and services one step ahead.
Whether security comes through data encryption, increasingly sophisticated facial recognition, multi-layered authentication processes, or a mixture of all three, most people feel confident that the tech servicing their transactions is more than fit for purpose. We confidently move vast sums of money around via secure cloud-based services without giving it much thought.
Technological advances have driven innovation, altered our relationship with financial products and services, and changed organizational structures and processes. The partnership of technology and money falls under the term fintech – joining financial services and digital technology.
Banks have to keep up with challengers
Banks used to be the guardians of financial innovation and were often regarded as resistant to change. However, in recent years, we have seen challengers entering the marketplace, and there has been an explosion of new financial service providers.
Examples of fintech turning the financial marketplace on its head include digital wallets, crowdfunding, peer-to-peer lending, digital wallets, prepaid digital services, and cryptocurrencies. Fintech companies deploy big data, machine learning, cloud computing, and cryptographic methods to bring consumers a whole suite of ever-evolving services.
New industries have emerged
It is not only the banking sector that has been transformed either. Whole industries have sprung up based on fintech advancements. Without fintech, the online casino sector could not have succeeded. Digital entertainment services are enjoying exponential growth globally, and customers can access every type of game from home or on the move. What used to be the preserve of land-based casinos and arcades can now be accessed from home or on the move from desktop and mobile devices.
A mobile or online casino combines many aspects of fintech and presents the customer with a captivating entertainment experience. Random number generators drive online slots and most casino games. Casino accounts need to be as secure (if not more so) as digital bank accounts and are linked to numerous other fintech apps and services to allow customers a seamless playing experience. The workings behind an instant withdrawal at UK casino sites bring together a wide range of fintech expertise spanning many different specialties. The games are provided by one set of developers, the casino platforms another, and the financial integration requires another set of tech skills. What the player sees, on the other hand, is a fun, responsive game and a rapid payout to their account if and when they manage to land the jackpot. It all works seamlessly behind the scenes (and screens).
Fintech is part of our everyday lives
Fintech is now so enmeshed into everything we do that most of us would struggle to conduct ourselves without applying it in our daily lives. We expect to be able to access financial services 24/7 rather than within limited banking hours when the branch is open. However, it is not only the technology that has led to this disruption but the customer’s willingness to adopt and use the technology.
While there is some pushback against the idea of cashless societies due to concern that older and vulnerable people will be excluded, a vast percentage of people now only use the banking details embedded in their phone’s digital wallets when shopping in the real world. We swipe out virtual loyalty cards, collecting points and accessing instant rewards as we go. Covid-19 meant many people switched first to contactless payments and then totally left the plastic card at home.
A recent report revealed that 90% of UK banking customers consider technology the most important factor when choosing where to bank. Mobile apps allow customers to pay bills, check account balances, and deposits without ever visiting a branch. In addition, many of the newer organizations have additional features like separate money pots and customer services with AI chatbots and live operators. Fintech companies have been able to ‘unbundle’ financial service technologies and are less constrained by regulations than the larger, more established banks.
Follow the money …..
Conventional banks are more constrained by regulation than newcomers to the marketplace, who can often offer customers efficient and lower-cost solutions. The venture capitalists have recognized the market has enormous potential, and investment in the sector worldwide rose from $1.89 billion in 2010 to $115 billion in 2021. The saying goes, ‘follow the money,’ and the money is flowing to fintech and innovation.