Fintech is an industrial trend in which companies make use of technology to provide financial services in an agile, efficient, innovative, and reliable way. The term Fintech is formed from the union of the first letters of the English terms “Finance” and “Technology”. Fintech companies offer financial services operating within various markets, some Fintech provides these services directly to banks or institutions of the financial system, while others design solutions for other business areas. Here we share some trends of Fintech at a global level:
- 1 Fintech companies are becoming more global every day
- 2 Blockchain is here to stay
- 3 Traditional banking is committed to collaboration
- 4 New regulations and laws that change the rules of the game
- 5 The insurtech (insurance) market has matured
- 6 Regtech has a lot of potential
- 7 Fintech companies represent an opportunity for financial inclusion
Fintech companies are becoming more global every day
The influence of Fintech companies is not only limited to a specific country, but they have a global reach, this allows people from different parts of the world (regardless of whether they live in remote countries or the third world) to access high-end financial services quality and effective, this also allows banks and financial institutions to expand their reach to markets in other countries, offering online banking products and services that add value to their end-users.
Blockchain is here to stay
Since the arrival of Bitcoin, Blockchain technology has become well known globally, showing the different benefits and advantages that it can offer to the current monetary system and to banking in general (decentralization, transparency, and security of operations, etc.) It is true that Blockchain is here to stay and is considered key in the future development of Fintech.
Traditional banking is committed to collaboration
The correlation between digital banking and Fintech is becoming closer and increasing, seeking a balance between competition and collaboration. Many banks choose to make alliances with Fintech companies or use their technological platforms (for example, banking software) since it is an effective way of offering a competitive and efficient online platform to their clients (at a low cost). Some banks directly support Fintech companies, with the strategy of investing, acquiring, creating, and collaborating with the ecosystem. Thanks to this work, several startups and pioneering initiatives emerged, such as BBVA Open Talent, which is one of the largest Fintech competitions worldwide.
New regulations and laws that change the rules of the game
Some different regulations and laws are promoting the development of Fintech, an example of this is PSD2, which is a European regulation of digital payment services, the impact of this regulation will be great in the EU, and will surely also be felt in all the world. It means an important “push” towards “Open Banking” and increases the competition for the client. In this context, banks can create platforms that will allow them to be leaders in these Open Banking ecosystems, for example, BBVA API_Market and Citi Developer Portal.
Another prominent example is the law of the State of Wyoming in the US that allows companies or entities (which meet certain requirements) to have an official banking license to safeguard bitcoins and digital assets. This law will allow these banks to diversify their services, benefit from blockchain technology, and be more competitive in the market.
The insurtech (insurance) market has matured
Insurtech is a group of young companies or Startups, which apply a series of technological innovations to expand coverage in the insurance business. Developments linked to the Internet of Things (digital interconnection of everyday objects with the Internet), the rise of insurance as a service (insurance that is handled 100% digitally with more transparent and fair tools), and the use of algorithms to foresee the behavior of the insured.
Regtech has a lot of potential
Regtech is a group of businesses that relies on new technologies such as the cloud, big data, or the blockchain itself, to create solutions and help companies in all sectors to comply with regulatory requirements. It has become a very peculiar market since banks are investors and also end-users. For example, Europe is a highly regulated market, so it is a “fertile” ground for these types of companies.
Fintech companies represent an opportunity for financial inclusion
As we saw in our previous article, Fintech is an opportunity for financial inclusion, for example, the Inter-American Development Bank (IDB), has recognized Fintech as a great alternative and an opportunity that will allow expanding access to the finance sector at the level of global, where there are still many people who are not served by traditional banks (as is the case in some Latin American countries), that is why in some countries, being a Fintech client or not being one, makes the difference between being “in or outside ”of the financial system.
What do you think about this topic? Do you know any other trends of Fintech companies?
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