These industries are getting future ready with FinTech. How about you?
We are at the fag end of September 2019. Time has been moving fast – almost at a breakneck pace. And at this time, a lot has been happening in the world around us. Innovation in tech is at its summit, markets are expanding beyond internal borders, and businesses are being driven by novelty.
And topping all that greatness is the groundbreaking changes FinTech is making and bringing to the global ecosystem.
Industries are welcoming FinTech at the blink of an eye or even faster. From enterprises to small and medium-sized companies (SMEs) and start-ups, the FinTech fever has caught up with all. From initially being regarded as a disruptor, FinTech is gradually working in synergy with other industries. What is left to be seen is how – how will changing times embrace the FinTech wave and how businesses will prepare and be ready for winning the FinTech race.
Beginning with the basics: What is FinTech
The FinTech revolution is here. The simple act of making payments from mobile phones is the perfect example of how effortlessly FinTech has been making its place in our regular lives.
But what is FinTech? In simple words, it is the application of innovative technology into financial activities, to improve services for businesses and consumers.
From banking and insurance, it has over the years spread its wings across retail, hospitality, real estate, and nearly every industry one can think of. And while some businesses are still deliberating overusing the tech, others are taking the leap with FinTech.
Why Fintech is important and why businesses need to adopt it?
FinTech’s global reach is speeding, full throttle. The use of smartphones, mobile apps and access to the internet and cloud, certainly has accelerated it, but what has made it flourish is convenience.
- Traditional banking methods have been slow, expensive and often lacked transparency; FinTech rejects that
- Services are sophisticated, digital and does not necessarily require infrastructural support
- It can be adopted by anyone, from anywhere, empowering people to take control of their finances
According to EY’s 3rd FinTech Adoption Index, 64% of global consumers have adopted FinTech. Further, across the six surveyed market, the rate of adoption has risen significantly from 16% in 2015 to 60% in 2019.
FinTech has already started making inroads in every industry, and its adoption in businesses has become almost mainstream. It’s only time that recognizing its merit, more industries will adopt and include it.
FinTech around the world: How industries are adopting it
It goes without saying that FinTech is more than a buzzword today. Debunking the myths around FinTech, businesses worldwide are welcoming FinTech, realizing its potential and capabilities. From blockchain and cryptocurrencies to crowdfunding platforms and trading apps, with FinTech, there is something for everyone.
Transforming the way we commute: FinTech in the Automotive Industry
The automotive industry has been impacted by Fintech in a significant manner. New services such as location services, infotainment, vehicle management, and driving analytics have outperformed customer expectations, taking customer satisfaction to a different level.
In-car payments, for instance, are getting increasingly popular. Although, right now only being used only for payments for parking and gas, the potential to leverage on the same is massive. Popular examples include:
- Samsung has partnered with SAP Labs for Samsung Pay for mobile payments of gas
- Ford has introduced FordPass, an app through which you can pay, schedule future payments and even order services on-demand car cleaning.
- GM and Mastercard come together for making an in-vehicle platform for making payments
- Mercedes pay has been developed to help with payments for parking and their Connect stores.
Digital Leasing and Lending:
Apart from in-car payments another related space where Fintech is playing a huge role involving the automotive industry is leasing and lending. This has grown primarily due to players like Uber, Lyft, and Didi shifting the landscape of the transportation-sharing economy completely.
This has also resulted in flexible schemes for consumers and in new services that haven’t been heard of before. For example, specialized financial services like Drover are into place with which you can simply select your car, choose your subscription model and just pick up your car. Your car finance, insurance, road tax, and other details are already a part of your subscription.
Not surprisingly, AI-powered mobile applications have emerged as one of the most effective and efficient modes of reaching out and staying connected with users, facilitating transactions and providing convenience.
How FinTech is shaping the Insurance Industry?
The rise of FinTech has led to some interesting developments, especially in the insurance sector popularly garnering for itself the name of “InsurTech”.
Some ways in which FinTech is affecting the industry include:
- Mobile insurance solutions are being developed to help consumers with instant digital transactions
- Insurance companies are digitizing their operations and are offering their products and services digitally
- New-age solutions for the commercial sector such as peer-to-peer brokerage, digital brokerage, drone inspection for underwriting and claims
- InsurTechs further facilitates the decision making process with consumers getting to know of other products and pricing models. Further, aggregators like confused.com and comparethemarket.com enable customers to make the best choice.
Does this mean traditional insurance companies would have to go? Not exactly. FInTech in any sector is both a collaborator and disruptor. It collaborates in that it brings in digital technology and solutions to help businesses scale and grow. It’s a disruptor in that it rejects legacy systems and in turn controls costs, reduces manpower requirements, streamlines capital allocation and more. In most cases, there’s the suitable use of AI to provide advice through a digital interface as well.
Will FinTech be the gamechanger in Stock Trading?
When discussing industries and sectors that have been transformed by FinTech, any discussion is incomplete without including Stock Trading (through the influence is not massive, yet). Courtesy financial technology, capital markets are no longer accessible only on public platforms but have been significantly affected by crowdsourcing, private capital, and social investments.
From benefits in reducing the cost of manpower, commissions, and improving efficiency programs, it can be assumed that in time, a new wave of the FinTech revolution will hit the stock trading market. With FinTech in stock trading, we are already witnessing a shift in the value chain of capital markets, sourcing capital, data and analytics services, etc. and we can only wait for more to come. Some examples include:
- Pre-trade/Access to capital: Crowdfunding platforms and bond issuances are growing. Korea exchange has started the Korea Startup Market to enable equity shares of startups to be traded in the open market.
- Trade execution: Has helped enhance trade security.
- Post-trade services: Investment in distributed ledgers is increasing by the day.
- Network platforms: There is an increasing number of platforms that are being developed which connect paries intermediated by banks. A good example is Tradeteq, in which banking and non-banking investors connect, interact and transact. These platforms use real-time network data and real-time payment behaviors to form an accurate credit score.
- Trade finance processing: Can speed up trade finance processing from 2 hours to 45 seconds including document checking, compliance regulations, and security. Companies like Traydstream are working on making this technology available.
With the developments and progress that is taking place around the globe, it can be said that Fintech is affecting all sectors and market players worldwide. Mobile app development companies, in particular, are working closely with blockchain technology and FinTech to build products that are future-ready and can withstand the disruption and chaos being caused.
And for businesses that have not yet adopted FinTech or are unsure of adopting it, this is reason enough if they still want to be a part of this global race.
Are industries ready for the FinTech race?
When it comes to the adoption of FinTech into businesses, people and consumers are no longer reluctant. Most consumers are familiar with the ripples FinTech and related deep tech like blockchain is making in the market, and gradually opening up and adapting it.
But the core challenge at the moment is to do adopt swift upgrades and innovation, making new things become old instantly. With innovation in technology at its prime, businesses often find it difficult to learn, unlearn and re-learn new and old things.
But then, nothing outstanding comes at an easy price. And neither will FinTech.