Financial services in one of the most technology-intensive industries out there. It is of little surprise therefore that in recent years we’ve seen the emergence of so-called “fintech” – the blending of finance and technology to create new business models.
This blog post is the start of a series of reports and webinars that we will produce at Belatrix, examining the key dynamics playing out in fintech, as well as highlighting some of (what we believe) to be ground-breaking work that we are conducting in the fintech space, such as with augmented reality.
Fintech is one of the most promising industries in 2016, because of the potential to use technology in new ways to develop new business models to lend, process or transfer money. Companies such as The Lending Club, Transferwise, or Currency Cloud, to name just a few, represent significant emerging challenges to traditional financial service providers.
We’ve already seen the potential of technology to transform industries such as media. 2016 will be the year that the gradual changes we’ve been seeing in the past few years gathering pace in finance, really come to the fore.
Later this month Belatrix will host a webinar, exploring what we see as the three key dynamics underplaying the fintech revolution:
- Data and analytics transform financial experiences. Ultimately financial services and banking is all about data. Therefore the improved use of data, combined with insights gathered from big data, promises consumers much more. For example banks can improve their risk assessments of customers by improving their use of data, as well as using data from a broader array of sources (for example, can they create new models using data from sources such as social media to better determine if someone is eligible for a credit card?).
- Peer-to-peer cuts margins and profits of traditional banks. For instance, Transferwise uses peer-to-peer networks to dramatically reduce the traditional heavy costs of transferring money internationally.
- New payment technologies create a vibrant field of providers. New payment technologies such as Square, as well as those with a longer history such as PayPal, make it significantly easier for consumers to make payments. The enjoyable and easy customer experience of using these new payment tools stands in significant contrast with traditional payment technologies.
How traditional banks and financial service firms respond to the fintech threat will be one of the most exciting and fascinating dynamics to watch in 2016 and the coming years. Long-standing frustration with the quality of service at financial providers adds fuel to the entrepreneurial fire of fintech. Fintech will force banks to invest more in their technology capabilities, partner with upcoming start-ups, and also transform their organizations (for example, what talent will they need to hire in order to focus more on the quality of their customer experiences).
Belatrix works with numerous organizations, both more traditional finance providers that are making the shift, as well as digitally-native organizations. We look forward to highlighting some of our work in our upcoming blogs, webinars and whitepapers in 2016.