Financial Technology or “FinTech” is a term associated with a company or technology which is providing a new way of delivering financial services to consumers and businesses. The rise of FinTech is the result of our developing trust in technology. For many years, traditional banks and financial institutions were viewed as the bastions of our finances. For this reason, they seldom changed their infrastructure and followed the same set-processes to deliver their services. But as technology has evolved and we have become more comfortable with how it stores our data, traditional financial bodies have been left standing still as consumer confidence has moved away from the brick-and-mortar branch to embrace these new technologies.
By nature, FinTech companies are all about breaking up the established order. So much, that the term FinTech has become an industry buzzword, aligning itself to innovation. The twenty-first century consumer is accustomed to operating in a digital world, where efficiency, speed, access and convenience underpin the requirements of a service. As FinTechs have not been held back by legacy services and infrastructure to the same extent as banks , they have been able to move fast and develop the technologies which are required to do this.
For instance, the rise of mobile banking and the integration of financial services into social media and messaging platforms show how our expectations have shifted and we now embrace disruption. Traditionally, the bank branch would be the hub of all our financial services. It would take a visit to the bank to transfer money, to open a new account and to set up recurring payments. All of these services can now be solely handled on our mobile phones through apps. Banks have been forced to embrace these changes introduced by FinTech companies, otherwise they would face a shrinking customer base.
These are not the only changes which FinTech companies have brought about. The rise in popularity of online-only banks and financial institutions such as Monzo and Revolut show that these new services are closer than ever to meet the consumer demand. Monzo and Revolut have demonstrated that by discarding the physical bank branch, they can deliver real-time financial feedback and services, helping customers to budget and exchange currencies, as well as manage their finances with ease. Additionally, the rise of crypto-currencies and Blockchain has proven that consumers are ready to embrace digital money as the next stage of financial services.
Financial Technology is only set to open up the industry further in the future too. With new Open Banking regulations coming into force, banks will have to continue to work alongside FinTech start-ups and non-traditional financial services firms in order to deliver their services.