Financial technology is an evolving technology and innovation, which aim to replace traditional financial procedures in the delivery of financial instruments. However, it is still an emerging market that makes use of advanced technology to enhance financial activities in finance. This emerging technology can be defined as a combination of four main components – Automated decision making, digital transaction processing, information management and payment security. It offers new opportunities for companies in many different industries. As a result, the companies providing financial solutions are experiencing tremendous growth in customer base and profitability.
Most fintech companies focus their business models on providing customer solutions. Many of them have adopted a customized approach to solving problems of customers through online banking. There are also some companies providing traditional bank services in addition to online services for consumers. Many banks and other financial institutions are now adopting online banking because they believe that this model provides better service and better flexibility and at the same time, it has reduced operational costs. The fact that the traditional banking process is less personalised compared to online banking and the fact that the interaction with customers is less and Feng Shui not present in traditional banking process has reduced the trust among customers towards banks and financial institutions.
The growth in internet technology has brought about a dramatic change in how the firms providing financial products and services operate. Today, customers can choose and transact business with financial institutions using their personal computers or even mobile phones. This scenario has provided a new opportunity for companies providing financial solutions to consumers. The success of these companies depends on how well they manage and adapt to the changes in financial markets.
Fintech startups are expected to witness tremendous increase in the next few years. Apart from consumer financing, fintech companies are also adopting their services to retail sector. In the retail sector, the business of selling financial products and services is also becoming lucrative. A number of retailers are entering into the fray to get a piece of this lucrative market. According to estimates, more than a hundred million consumers are expected to be channelized through retail financial institutions by the end of 2021. Retail stores are fast adopting the e-banking system as a means of gaining cost benefit.
Since traditional institutions are slowly removing the traditional role of banks in terms of finance, there is a significant chance that the sector could witness a decline in the next few years. There is a possibility of startups claiming a significant share in the financial industry. There are several factors affecting the growth of fintech and its startups. These include the amount of capital required to run the business, government policies encouraging innovation and new banking technologies like mobile money transfer.
The popularity of mobile banking apps has increased consumer awareness about fintech solutions and increased chances of people engaging with these services. However, according to analysts, further development is yet to happen as banks are working out a strategy to integrate mobile banking and fintech. Mobile app developers need to come up with innovative mobile applications to support banks’ mobile banking service. In addition to that, the increased competition between banks may further push banks to streamline their services in order to remain competitive.