Fintech is a rapidly emerging industry that is scaling rapidly. Fintech companies are some of the swiftest-growing firms in the world. The integration of technology in financial services is growing at a staggering pace, and there is a growing interest in it. If you want to know more about this industry, you need a credible
Fintech is a rapidly emerging industry that is scaling rapidly. Fintech companies are some of the swiftest-growing firms in the world. The integration of technology in financial services is growing at a staggering pace, and there is a growing interest in it. If you want to know more about this industry, you need a credible fintech guide that gives accurate and helpful information.
By Katya Smith
Global finance brands such as CitiGroup, Goldman Sachs, and JP Morgan are all seeking to ensure the security of their companies’ futures by investing heavily in fintech. These brands are particularly interested in artificial intelligence, machine learning, crypto, and blockchain technologies. The fintech landscape has several areas that you can delve into, such as cryptocurrency and digital cash, blockchain technology, cybersecurity, and insurtech, which is using technology in the insurance industry.
3 Trends Happening in Fintech
The union of financial services and technology has resulted in synergies and disruption. If you want to know more about it, here are the 3 major trends that you should know about the fintech industry:
High Level of Regional Disruption
Successful fintech companies are not emerging at the global level. Rather, they are causing disruption at the regional level. This is primarily due to the variations of regulations for each region, and the need to comply with these regulations per region or even per country. Instead of launching a global effort, companies are responding to the regulatory complexities of each geographical location. For instance, each US state needs different licenses for money transfer. However, in the European Union, approval of money transfer can be applied across other EU countries. On the other hand, regulation in China has been more accommodating, resulting in the formation of ecosystems by technology giants.
Rapid changes in the B2B fintech arena
In the past couple of years, there have been huge investments in B2B fintech startups. We will see the results of these huge investments in three ways: more bank-fintech partnerships, increase in B2B lending, and more B2B payment products.
Increased Pressure for Bank-Fintech Partnerships
Now that huge banks such as JPMorgan Chase and CitiGroup have embraced fintech, there’s increased pressure for bank-tech partnerships. More and more second-tier banks will get into the game. This translates to better fintech offerings for businesses.
Increase in B2B Lending
Business lending is expected to increase as fintechs use a wide variety of data sources and the latest technologies to create new financing technologies. Experts are also predicting a huge increase in supply-chain finance options.
More B2B Payment Products
B2B fintech payments are steadily increasing. Massively underserved by traditional banking institutions, fintech solutions for business payments will now be an easier process. In the past, B2B payments involve a lot of complex processes and paper checks. With the infusion of fintech solutions, more and more processes are being automated. This will create a massive ripple effect in B2B payment solutions.
Going Back to Business Fundamentals
Since the fintech industry is booming and many people are eyeing it as the “next big thing”, investors are becoming more selective. Going back to solid business models has never been more important. Many successful fintech startups have evolved into sophisticated companies that deliver amazing innovation with dynamic digital marketing campaigns using cutting-edge technology. However, they still don’t trump solid business models and sticking to tried—and-tested business fundamentals. In fact, there have been very successful fintech startups that didn’t use the latest technologies.
There are much-hyped fintech startups that fizzle out because they neglect following traditional principles of business and marketing campaigns. Many investors are scrutinizing the business model of fintech startups, choosing to support later-stage companies that have proven that they can attain meaningful scale and profits. Investors are choosing more traditional business models because customer adoption of innovative business models takes time.
These truly innovative fintech companies that have not developed a sustainable business model require heavy investments over a long period before revenues start pouring in. They need to think of ways to create meaningful revenues quickly in order to attract more capital. Therefore, the combination of the latest technology and a clear business model will more successfully disrupt the space.
Fintech is an industry that should be on every investor’s and consumer’s watch list. According to the EY Global Fintech Adoption Index, 64% of consumers around the globe use Fintech, encompassing 27 markets. The prediction is that fintech firms will continue to have more opportunities for drawing in more customers to their platforms.
There are still a lot of trends to watch out for, such as asset tokenization and mega-round investments. The fintech industry will continue to accelerate in the next few years, with more companies entering the space and leveraging technology and innovation to provide highly-personalized and frictionless services.
Katya Smith is a copywriter/content writer who specializes in Finance. A visionary globe trotter and self-proclaimed goat-lover-yogi. Currently residing in Israel.
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