FINTECH AND THE FINANCIAL INDUSTRY
FinTech and the Financial Industry
Introduction
Currently, it is impossible to think of a world without the internet and mobile devices. These have become core elements in our lifestyle and they have brought with them a high degree of disruption in virtually every area of businesses, with no exception to the financial services sector. This digital revolution is transforming how customers access financial services and products. The financial sector might have experienced some degree of change in the past. However, this constant penetration of technology-driven applications in almost all segments of financial services is something new. The phenomenon that has been accelerating the pace of change and reshaping the financial industry is known as FinTech.
What is FinTech?
FinTech refers to the usage of technology across all financial services functions. For example, replacing paper-based processes with applications and software. In the past, FinTech was mostly used in the back-office functions via software that was aimed at assisting bank personnel to handle accounts, manage customer databases, and execute transactions. However, FinTech has now transformed how many banks currently operate. Technology is no longer relegated to the gloomy corners of back-offices, it has taken center stage. FinTech is mainly about innovation, transformation, and disruption, and it will without doubt impact and shape how financial institutions across the globe operate. FinTech is the driver to the disruption that is taking place in financial services, and it is reshaping the way consumers and companies are engaging by changing how, when, and where financial services and products are provided (Manoj, John, Haskell, Steve, & Dean, 2016). Thanks to FinTech every digital transaction is possible at customers fingertips be it foreign currency exchange, online shopping, money transfers, or stock investments. FinTech places technology at the heart of financial services, which fundamentally changes how companies interact with their customers. The proliferation of FinTech has resulted in a number of positive impacts towards the society that include the reduction in the prices paid by customers, increased competition, and wider access to financial services amongst the traditionally underserved.
FinTech is at the intersection of financial services and technology sectors where start-ups that are technology-focused and new market entrants innovate on the services and products that are currently being offered by the traditional financial services industry (Lu, 2017). For this reason, FinTech has been gaining momentum and it has been causing disruption to the traditional value chain of financial services. The financial services sector is continuously being fueled by FinTech. It is no longer a secret that customers are doing more business with these non-traditional players and this is causing uncertainty to the financial industry. Current incumbents have been forced to react to this and they are trying to work with FinTech in order to leverage on the ecosystem that has been created. This means they need to turn the innovation into an advantage and eliminate their concerns around their business being at risk. It should be understood that the accelerating pace of technological change is the most creative force, and it is also the most destructive force in the financial services ecosystems today.
The main drivers for FinTech have been mobility and the internet. With the increasing penetration of smartphones, customers have an easier way to interact with their respective banks and get real-time views of their bank accounts. As the mobile applications grew in sophistication so did the needs and demands of the customer for more intuitive banking services. Digital transformation in the banking industry that is coupled with mobility has managed to transform the nature of banking. Customers do not have to experience the long queues and waiting times in the banking halls in order to deposit money, request for checkbooks, or conduct trades. They can be able to perform all these functions straight from their mobile phones.
Current Status of the FinTech Industry
The FinTech industry growth has experienced exponential growth within a short period of time. In just one year between 2013 and 2014, the FinTech industry grew by approximately 400 percent, this is from $3billion to more than $12 billion. The industry has also seen a total global investment from 2010 to 2015 of $49.7 billion, with only 25 percent representing $12.7 billion being invested in the first and second quarters of 2015. Looking at the financial year 2017 the first quarter saw the industry receiving 1.8 billion globally. This demonstrates that the future of FinTech is bright and it is growing with each passing year. According to the World Bank Group, close to 42 percent of the global population does not have access to any formal financial systems (Oshodin, Molla, Karanasios, & Ong, 2017). This fact presents a huge opportunity for the FinTech industry to tackle since it cannot be addressed by the financial institutions.
It is worth noting that currently, the largest area of FinTech investment has been in payment processing and lending solutions. However, in the recent past, emerging technologies like P2P blockchain that have been popularized by Bitcoin and cloud-based technologies that increase the speed and security of financial networks have been strongly supported. Financial institutions are embracing the disruptive nature of FinTech and they are forging partnerships in an effort to sharpen their operational efficiency and respond to their ever-changing and increasing customer demands for innovative services. It is for this reason that funding for FinTech is moving from a venture capitalist dominated field to a more mainstream investment. According to Manoj, John, Haskell, Steve, and Dean (2017), funding for FinTech startups has increased at a Compound Annual Growth Rate (CAGR) of 41 percent in the last four years, and over $40 billion has been in cumulative investments. It is apparent that cutting-edge FinTech companies and financial innovation are changing the competitive landscape and redrawing the lines for the financial services industry.
The US offers the most attractive ecosystem for FinTech startups mainly because it is where the largest percentage of capital comes from. There are existing giants who continue invest millions each year towards FinTech innovation and this makes the US a prime location for most innovations in the financial sector. However, this does not mean the FinTech is only found in the US, it is everywhere. The technology can be found in all payment methods and lending that is taking place globally. As we will see in the upcoming section there are many kinds of FinTech technologies and they have their roots from different parts of the world.
Examples
Chatbots for customer service
Chatbots are considered to be bits of software that make use of natural language processing and machine learning in order for them to continuously learn from human interactions. This tool is becoming highly popular for banks in order for them to streamline their customer-facing interactions like directing customers or handling queries. For example, Erica the Bank of America\\\’s chatbot is able to offer investment advice. Leading banks in Japan have also been rolling out chatbots that will assist their customers to navigate and find relevant information on the bank\\\’s website.
AI and machine learning
The main goal of the anti-money laundering department is to identify fraudulent transactions. For many financial institutions, this will involve a combination of people and software. The security software will generate an alert informing the employees of a potentially fraudulent transaction. Then the employee will investigate in order to determine if the transaction is a real threat or false positive. This is a time-consuming task and making use of FinTech will allow the financial institutions to adopt data aggregation platforms, process automation, and machine learning. Machine learning algorithms can use historical records to identify patterns and predict the possibility of fraud before it occurs, which reduces the manual effort by almost half (Lu, 2018).
Digital Banking
Banking is shifting from being a branch-specific activity to an activity that can be conducted from anywhere by using digital platforms like mobile and online banking. This decreases the need for having numerous brick-and-mortar bank offices. With an increasing adoption of online banking, many banks are forced to reduce their number and branch sizes. Online banking allows customers to access and transact from their accounts from their smartphones from anywhere. This ensures that customers do not have to visit a bank physically.
Blockchain
Blockchain makes use of the distributed ledger system that leverages stringent controls allowing for smart contracts and auditable data. The amount of time taken to transfer money and the costs charged to the customer make this technology favorable. Using inherent trust, blockchain offers the perfect trading platform for securities exchange. This is done by ensuring that there is transparency, which minimizes human errors, risk, and transactional fees.
Mobile money
In sub-Saharan Africa, mobile money has transformed the financial landscape. Mobile money makes use of P2P mobile payments, which make financial services more accessible. Mobile money has also brought millions of unbanked Africans closer to some formal economy.
Disruption of Financial Services
Technology will fundamentally alter the way we live, work, and relate to each other. This technological revolution will completely disrupt many industries and their business models. With every industrial revolution, there has been a significant impact on the demand and supply relationships. The revolution in the financial services has been termed as the fourth industrial revolution because it is completely different. It will have an effect on speed, scope, and systems altogether. FinTech is evolving at a much faster pace than could have been thought or seen in the past. The technology is also disrupting almost every industry. The changes are resulting in the transformation of entire systems of management, production, and governance. The technologies that come with the fourth industrial revolution are having a major impact on the businesses, but the disruption has been hitting hard on the banks and financial institutions.
When one starts to understand that a banks true business is the management of information exchange, then one can see why banks are being largely disrupted. When there are new forms, behaviors, and regulations on how companies and people exchange, consume, and trade information, this business segment becomes vulnerable to large disruptions of its business model (Shim & Shin, 2016). FinTech is bringing significant changes in the ways that people and companies relate to each other. There are disruptions taking place on both the supply side and the demand. On the demand side there is growing transparency, consumer engagement, and new consumer behavior patterns that are emerging, which are forcing companies to change how they market, design, and deliver products to the consumers. The supply side is seeing a majority of industries seeing the introduction of new technologies that allow the industries to create an entirely new way of serving their existing needs and change the current industry value chains.
In the areas that traditional banks are failing FinTech is succeeding. Clients are becoming more used to the digital experience that is offered by companies like Apple, Google, Amazon, and Facebook that they expect the same level of experience from their financial services providers. FinTech has identified this need and it has managed to ride the waves of disruption with solutions that better address the needs of the customers by offering enhanced convenience, accessibility, and products tailored to the consumers. The main priority has been customer centricity, which has been lacking in the financial services industry. Banks have been unable to meet the needs of digital native clientele, and this has created an entry point for FinTech. An increased focus on the customer, which has been lacking in the traditional banks and financial institutions is the main focus of FinTech, and by using this route the startups have managed to disrupt and penetrate to the consumer levels (Brandl & Hornuf, 2017). Normally it is not easy to receive financial services, but FinTech has made it easier for everyone to adopt modern FinTech solutions. The only requirements for using these services is downloading an app and entering an email address. This is way much easier when compared to the requirements placed by banks for opening an account. The bureaucratic nature of financial institutions has limited their level of innovation and this results in higher disruptions taking place (Gomber, Kauffman, Parker, & Weber, 2018). FinTech is mostly small companies that have a footing in technology and they are innovative. This makes it easier for them to adopt new technologies and change their mode of operation faster than any financial institution.
Conclusion
The disruption of the financial services is happening and this disruption is driven by FinTech. Financial services providers need to recognize the impact that FinTech has on the industry and focus on the positives in order to embrace the technologies. Consumers have changed the way they interact with financial services and it is vital the institutions realize this factor. Leveraging on the emerging technologies and focusing on the customer will allow the institutions to innovate and offer solutions that are attractive to the consumers.
References
Brandl, B., & Hornuf, L. (2017). Where Did Fintechs Come from, and Where Do They Go? The Transformation of the Financial Industry in Germany after Digitalization.
Gomber, P., Kauffman, R. J., Parker, C., & Weber, B. W. (2018). Special Issue: Financial Information Systems and the Fintech Revolution: Taylor & Francis.
Lu, L. (2017). How a Little Ant Challenges Giant Banks? The Rise of Ant Financial (Alipay)s Fintech Empire and Relevant Regulatory Concerns.
Lu, L. (2018). Decoding Alipay: mobile payments, a cashless society and regulatory challenges.
Manoj, K., John, S., Haskell, G., Steve, D., & Dean, N. (2016). Blurred lines: How FinTech is shaping Financial Services. Retrieved from PwC London, UK: https://www.pwc.com/id/en/financial-services/fs%20publication/FinTech%20Global%20Report.pdf
Manoj, K., John, S., Haskell, G., Steve, D., & Dean, N. (2017). Redrawing the lines: FinTechs growing influence on Financial Services. Retrieved from PwC London, UK: https://www.pwc.com/gx/en/industries/financial-services/assets/pwc-global-fintech-report-2017.pdf
Oshodin, O., Molla, A., Karanasios, S., & Ong, C. E. (2017). Is FinTech a Disruption or a New Eco-system? An Exploratory Investigation of Banksr Response to FinTech in Australia. Paper presented at the Proceeding of Australasian Conference on Information Systems.
Shim, Y., & Shin, D.-H. (2016). Analyzing Chinas fintech industry from the perspective of actornetwork theory. Telecommunications Policy, 40(2-3), 168-181.
Get Professional Assignment Help Cheaply
Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?
Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.
Why Choose Our Academic Writing Service?
- Plagiarism free papers
- Timely delivery
- Any deadline
- Skilled, Experienced Native English Writers
- Subject-relevant academic writer
- Adherence to paper instructions
- Ability to tackle bulk assignments
- Reasonable prices
- 24/7 Customer Support
- Get superb grades consistently
Online Academic Help With Different Subjects
Literature
Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.
Finance
Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.
Computer science
Computer science is a tough subject. Fortunately, our computer science experts are up to the match. No need to stress and have sleepless nights. Our academic writers will tackle all your computer science assignments and deliver them on time. Let us handle all your python, java, ruby, JavaScript, php , C+ assignments!
Psychology
While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.
Engineering
Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.
Nursing
In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.
Sociology
Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.
Business
We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!
Statistics
We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.
Law
Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.
What discipline/subjects do you deal in?
We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.
Are your writers competent enough to handle my paper?
Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.
What if I don’t like the paper?
There is a very low likelihood that you won’t like the paper.
Reasons being:
- When assigning your order, we match the paper’s discipline with the writer’s field/specialization. Since all our writers are graduates, we match the paper’s subject with the field the writer studied. For instance, if it’s a nursing paper, only a nursing graduate and writer will handle it. Furthermore, all our writers have academic writing experience and top-notch research skills.
- We have a quality assurance that reviews the paper before it gets to you. As such, we ensure that you get a paper that meets the required standard and will most definitely make the grade.
In the event that you don’t like your paper:
- The writer will revise the paper up to your pleasing. You have unlimited revisions. You simply need to highlight what specifically you don’t like about the paper, and the writer will make the amendments. The paper will be revised until you are satisfied. Revisions are free of charge
- We will have a different writer write the paper from scratch.
- Last resort, if the above does not work, we will refund your money.
Will the professor find out I didn’t write the paper myself?
Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.
What if the paper is plagiarized?
We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.
When will I get my paper?
You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.
Will anyone find out that I used your services?
We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.
How our Assignment Help Service Works
1. Place an order
You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.
2. Pay for the order
Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.
3. Track the progress
You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.
4. Download the paper
The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.
PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A PERFECT SCORE!!!
