FinTech (Financial Technology) describes companies that use evolving technology to create new and better financial services for businesses and consumers. The term can refer to start-ups, technology companies and even legacy providers who provide services such as financial services, insurance, payments and personal financial management.
Traditional financial service companies are right to worry about the disruption to the financial marketplace. FinTechs compete directly with traditional banks and financial organisations. They have the ability to operate anywhere in the world, are agile and can meet customer’s instant demands and they are changing the way consumers and businesses deal with finance providers.
These days FinTechs provide financial products which were once only available through more traditional banking institutions. Products include personal loans, commercial and equity finance, commercial investments and personal banking and this range is growing all the time in direct competition with traditional institutions.
FinTech’s deliver cost-effective solutions
The financial services market provides solutions for services from boutique personal banking to high profile investment management. Rapidly evolving digital technology is changing the financial services environment which is opening the market to new opportunities for companies competing for new business in the market.
FinTech start-ups use digital technology to offer financial solutions at a lower cost. Traditional banks and financial services should team with FinTech’s to develop solutions if they want to compete on that level.
Disrupting traditional banking
FinTech’s are making real headway into the traditional financial services market and it is a risk to these more traditional companies and their future growth. FinTech companies can underwrite financial deals using alternative data such as state department records, and a company’s online presence and website. With this leverage, businesses have better access to capital which is being invested in growth.
Originally, the term FinTech referred to the backend technology applied to a bank or financial institution. These days the term refers to a wide range of technological advancements for commercial and personal banking.
The speed and ease of the application process makes FinTech companies popular. Banks make it almost impossible with their inflexible demands for credit scores and collateral, as well as the long processing time it takes for an outcome. FinTechs look at the whole of a business to assess its suitability for finance. They look at tax records, profit and loss statements, bank and credit records which gives businesses, potentially unsuitable for traditional funding, the ability to secure capital to invest in organisational growth.
FinTech’s are here to stay
They offer low-cost access to good financial solutions on the run to meet consumer demand. Traditional financial services need to face it, FinTech’s are disrupting their businesses. They will have to make some fundamental changes to stay competitive.
Everyone has to come to terms there is a new ‘normal’ environment for financial services but, traditional banks and organisations that operate in a traditional framework will need to:
- Be more flexible – Traditional financial businesses tend to take forever to plan and deliver. They need to change this thinking to become more flexible to compete against, or partner with, FinTechs using emerging technology
- Do not get distracted – Financial institutions need to avoid being distracted by FinTechs. Instead of worrying about what they are doing, they need to look at their own business and develop solutions using the latest technology with their own customers in mind
- Think differently – Most traditional businesses struggle with innovation. They can look at the FinTechs and learn some lessons from their approach. Talk to people in the business for guidance
FinTech’s are changing the face of a traditional financial industry into one that is more agile and ready to meet customer needs. Leading global organisations, such as NashTech, have the expertise to develop financial solutions. They work with individuals and companies to develop innovative tools and software solutions. With many years’ experience across different industries, their financial systems and solutions include:
- core process re-engineering
- portfolio management
- consumer finance solution
- mortgage process management
- financial products and services distribution solution
- loan brokerage management
- customer account processing
- mobile optimised website and telephone ordering feature
- application conversion and migration
- offshore development centre
Whatever you need to do or develop to grow your business, talk to the people who deliver solutions, talk to NashTech.