The financial services industry is experiencing a time of unparalleled change. And this is primarily driven by fintech.
Financial technology is redefining the sector as we know it, with the so-called fintech revolution turning the traditional approach to finance on its head.
However, perhaps the most positive and valuable aspect of fintech is an increase in financial inclusion.
The level of financial inclusion thanks to fintech continues to improve on a global scale.
,According to the 2017 Global Findex Database, the share of adults with a bank account is 69 per cent, an increase from 51 per cent back in 2011 when the Global Findex Database was initially introduced.
Fintech has introduced a new paradigm to the design and realisation strategies for financial inclusion. A prime example of this is smartphones used for mobile banking and investing, thereby making financial services far more accessible to people.
Indeed, more and more people around the world are enjoying access to financial services because of fintech, perhaps who live in remote areas or who may not be able to use financial services due to the bias of conventional financial companies.
Furthermore, thanks to fintech, money transfers can be made to support families residing in other countries who rely on income from overseas. The use of fintech can also provide financial advice for people who perhaps cannot afford to seek counsel from mainstream advisory companies.
Moreover, investment in financial technology start-ups more than doubled in 2018 to reach a record high of $31bn, compared to 2017’s total of $15bn, as per a new report unveiled by Hampleton Partners.
Towards the end of 2018, the UK still led the way for fintech in Europe, with a new generation of innovators coming forward with record investment levels. However, although Britain is home to the biggest fintech firms in Europe, they are surpassed by U.S. companies such as Stripe, Robinhood and SoFi, which are all, in turn, dwarfed by China’s Ant Financial, recently valued at $150bn.
Fintech firms are filling the void left from the offerings from traditional financial services companies, particularly traditional banks, to cater to what customers now want and expect.
Indeed, fintech has resulted in enhanced digital consumer experiences in retail banking and integrated robo-advisory services in investment banking. Another fintech-driven trend we’re seeing more and more is the increased use of biometric technologies, such as smartphone fingerprint authentication and facial recognition for payments.
Businesses are also reaping the benefits of fintech, allowing firms the opportunity for cost-cutting, diversification, meeting regulatory requirements and boosting their clients’ experience, all of which help to build and maintain long-term relationships and business confidence.
Looking ahead, as the usage and adoption of fintech continues to soar, there will inevitably be challenges, as happens in any industry. However, the global rise in fintech will result in a better-connected world, improving the facilitation of financial services to a larger number of people across the globe, thereby enabling them to fully participate in the economy.
By Nigel Green, founder and CEO of deVere Group
