Everywhere one turns these days – one can’t avoid hearing the term “Fintech.” This emerging industry has two faces that are polar opposites, on one side its creating paranoia among traditional bankers, while on the other it’s hailed as the next big ray of hope that has the potential to transform the entire world of finance.
We recently chatted with Mohsin Jameel, an industry veteran and a successful entrepreneur in the world of cryptocurrency, blockchains and more. Here’s what he had to say about the “Fintech Market” and what to expect from it in the future.
Fintech will drive new business models
For several decades, small players and new entrants in the financial services industry found it challenging to stay afloat, let alone think about success. Well, not anymore! Today, the financial services arena is peppered with disruptors. These disruptors are very often fast-moving companies, mostly startups that leverage the power of technology to carve a niche for themselves.
These disruptors are transforming every process from insurance, banking to mobile payments. And, what more, these disruptors have been successful in diverting the client base of several big players in the industry.
This is evident from the fact that Fintech has received $17.4 billion worth of investments in 2016 alone. And, according to the EY’s Fintech Adoption Index for 2017, over a third of all digitally active users are now using two or more fintech services. And, the Fintech market is booming in emerging economies like China, India, Brazil, UK, and Australia.
The “Sharing” strategy will catch up with the Financial System
Today, we’re familiar with sharing services in booking cars, hotel rooms, etc. This is just the beginning. By 2020, this “Sharing strategy” will become a major part of the financial market. People will still use banks, but the banks of tomorrow will have no resemblance to the banking institutions of today.
Here, by sharing, I refer to a methodology that provides for decentralized asset ownership. Technology will play a crucial role in connecting lenders to borrowers, eliminating the need for intermediaries like banks.
The blockchain is just now getting started, and it’s all set to become a major disruptor
Recently, the surging popularity of Bitcoins, Ethereum, and other digital currencies put blockchain in the spotlight. But, this is just the beginning. Blockchain will create massive transformations in the functioning of the financial institutions, and the openness of the chain will build a secure and reliable infrastructure for the Fintech industry.
Customer Intelligence will emerge as the biggest asset of your Business
Do you know what your customers prefer? What do they value? Are you sure? Today, Customer intelligence is the core of all businesses practices. With big data and analytics, companies today can find out more about the preferences and likes of each customer, thereby delivering a tailored solution to suit their specific requirements.
Robotics and AI will bring back off-shore jobs
Just a few years ago, hundreds of thousands of jobs went to off-shore markets that had abundant cheap labor. Today, with the advancement in robotics and AI, more and more jobs are getting done locally. We are already seeing alliances forming between financial service providers and companies involved in robotics and AI.
These companies are working on targeting specific capabilities like natural language processing, identification of patterns and sequences, social and emotional intelligence and self-supervised learning. Soon, robots will replace not just the teller but other key positions in a bank.
Skeptical of robots doing tasks that require human capabilities? Don’t be! In fact, self-driving cars have performed consistently well in complex tasks. And did you watch Alexa?
While robots have made rapid advances, they are still in the early stages of development cycles. In the next three to five years, you can expect to see modest but evolutionary advances as new models.
Cyber Security will become one of the major hurdles that financial institutions will have to tackle
Cyber threats are one of the major worries facing financial institutions, and the Fintech industry is no exception. Here are a few key areas of concern for Fintech:
- Third-party vendors
- Cross-border data exchanges
- Increased use of IoT brings in a whole array of smart devices into the network
The Public Cloud will become the leading infrastructure model
Today, many financial institutions employ cloud-based software for various business processes like accounting, CRM, HR, KYC verification, security analytics and others. As the cloud model continues to evolve, more and more financial institutions will move both core and non-core services to the cloud.
The Fintech Industry is on the cusp of a major revolution. Finance and technology will become so inseparable that not only the small, upcoming players but even the big names in the industry will have to embrace it or get lost in the race.
What are your thoughts?