Cloud Accounting Industry

Fintech Report: Financial Services Sector Growth

Financial Services Sector

Fintech, a term typically describing the small financial start-ups competing with established financial institutions, is increasingly playing a role in our business and private lives, making use of analytics, mobile platforms, digital technology and more. With increased consumer expectations and heightened security concerns, interest in the fintech sector is at an all-time high.

Fintech vs. Traditional Banking

Though there’s much hype around financial technology firms, and they’re certainly shaking up the financial services sector as a whole, many experts don’t believe they pose an immediate risk to the systems already in place. Including services such as peer-to-peer lending, crowdfunding, and app-based payment tools, fintech developers are forcing financial services to evolve into a more customer-centric sphere than previously experienced, and many customers are more than happy to bypass the haughty attitudes of financial institutions of old and deal instead with innovative and vibrant fintech services.

The fintech sector is, however, still tiny and though perhaps encouraging traditional institutions to change more quickly than they might have otherwise, fintech alone won’t be dominating the financial services sector anytime soon. Of course, there are a few progressive financial institutions that aren’t waiting for the future competition but instead are merging their brands with fintech firms and helping them go mainstream. This combined effort provides a unique benefit to both old and new as the disrupting fintech firms foster better customer engagement and original products while the conventional financial powerhouses support the union with their resources and networks and provide responsible and trustworthy foundations.

Rules & Governance for Fintech Organizations

But just because fintech isn’t yet competing directly with many of the larger traditional financial institutions doesn’t mean it won’t in the future. For this reason, some countries are being cautious with their fintech regulations, concerned that they might repress a promising sector but equally aware of the necessity for proper controls and security. In the US federal regulators are considering a new regulatory framework for fintech organizations, while various states have already implemented their own guidelines. Since digital currencies and blockchain form a fundamental part of many fintech products and services, regulating the fintech industry as a whole becomes an intricate web.

With the recent hacking of Tesco Bank in the UK, however, it’s become apparent that regulations must be put in place, and quickly. After 20,000 customers had money fraudulently taken from their accounts, the UK’s largest grocer saw its stock dropping by 3.3%, but aside from the action required to repair the damage for this particular attack we’re left worrying which other fintech services that we rely on may be threatened. Top regulators for the financial industry are already promising stringent rules and governance measures for the fintech sector, and it’s likely, if not necessary, that the full spread of financial laws will be applied to fintech organizations before long.

Where to Next?

Financial Services Sector

(Infographic Source: Capgemini)

The future of the fintech industry isn’t yet clear, though most are confident that fintech will have a substantial role in years to come. As traditional financial services organizations explore strategic advances to ensure they remain competitive, fintech solutions continue to blaze the trail, sometimes providing inspiration, and yet other times serving as a cautionary tale. The World Fintech Report 2017 finds that already 50.2% of global banking customers are using fintech products or services, and in fact, many are using solutions from a range of fintech providers suggesting a threat to traditional banking loyalty. It’s unsurprising too that the technology is more popular with younger, affluent, tech-savvy users looking for value for money over a one stop shop. Further, it appears that emerging markets typically show the highest adoption rates, with China at 84.4% and India at 76.9%.

As the overall financial services sector undergoes a dramatic shift, the consumers often come up trumps as they’re provided with a range of services both old and new to suit differing risk appetites and product requirements. There is indeed much work still to be done by those in the industry and those who manage and govern it, but for a while yet we’ll see a burgeoning market.

By Jennifer Klostermann

Jennifer Klostermann

Jennifer Klostermann is an experienced writer with a Bachelor of Arts degree majoring in writing and performance arts. She has studied further in both the design and mechanical engineering fields, and worked in a variety of areas including market research, business and IT management, and engineering. An avid technophile, Jen is intrigued by all the latest innovations and trending advances, and is happiest immersed in technology.

Open APIs Alone Won’t Change Banking

Open APIs Alone Won’t Change Banking

Open Banking API's Most people think of banks as one monolithic entity, but they are actually made up of hundreds ...
The Path to the Cloud: A Look at Different Approaches to Cloud Migration

The Path to the Cloud: A Look at Different Approaches to Cloud Migration

Different Approaches to Cloud Migration The public cloud has gained considerable momentum this past decade. Concerns about cost and security ...
Chris

The Cloud Isn’t a Security Issue; It’s a Security Opportunity

Security Issue In order to stay ahead in today’s competitive business landscape, companies need to constantly innovate. Development teams must ...
The IoT-Connected Car of Today - Cases From Hertz, Nokia, NTT, Mojio & Concur Technologies

The IoT-Connected Car of Today – Cases From Hertz, Nokia, NTT, Mojio & Concur Technologies

The IoT-Connected Car of Today Imagine a world where your car not only drives itself, but also says intelligent things ...
What Skills Do I Need to Become a Data Scientist?

What Skills Do I Need to Become a Data Scientist?

Becoming a Data Scientist Leveraging the use of big data, as an insight-generating engine, has driven the demand for data ...
6 Blockchain Applications That Any Small Business Owner Can Use

6 Blockchain Applications That Any Small Business Owner Can Use

6 Blockchain Applications Although associated with the virtual currency bitcoin, blockchain technology can be applied across multiple industries, and it ...
Kodak Bitcoin mining 'scam' evaporates

Kodak Bitcoin mining ‘scam’ evaporates

The company behind a Kodak-branded crypto-currency mining scheme has confirmed the plan has collapsed. In January, a Bitcoin mining computer labelled Kodak KashMiner was on display on Kodak's official stand at the CES technology show ...
Netflix subscriber slip hints at 'lumpy' road ahead

Netflix subscriber slip hints at ‘lumpy’ road ahead

(Reuters) - Shares of Netflix Inc fell 13 percent on Tuesday after it reported a surprise shortfall in subscriber additions for a second quarter marked by the lack of a blockbuster new show and the ...
Google hit with record $5 billion EU antitrust fine

Google hit with record $5 billion EU antitrust fine

EU regulators hit Google with a record 4.34 billion euros ($5 billion) antitrust fine on Wednesday for using its Android mobile operating system to squeeze out rivals. The penalty is nearly double the previous record ...