Banking or Banks !!  – This article is purely from my own assumptions and experience and not a conclusion. The post was first published on disruptive views dot com “For Africa will FinTech Reign“. This blog post focuses on the issues of banking services development and trends around banks, banking, FinTech & financial services mediums.


Banking or Bank  – Two are not coupled any more

My learning and understanding out of developments taking place around payments, payment methods across the globe are changing on an almost daily basis. Paymentintelligence is helping us to avoid creating the creative mess, stop innovating and start improving based on the data we have. Test, measure success and repeat what works well (Off course Innovating process does not stop completely).

Developing something new on top of the old legacy system neither works (in most cases) nor answers to the problems at hand. Sometimes un-developing something existing can uncover the hidden gems which are also very useful. As I say in my style “Lets Un-Develop to Innovate?

What is needed, Banking or Banks?

AILabPage – FinTech Series – Banking or Bank

This part-2 of to my earlier on 26-Dec-2014, “Will-Banks ever be successful in Mobile Money or Mobile Payments“. Artificial Intelligence has brought freshness in financial services/payment service industry with the help of BigData that have just started growing. Currently, markets daily needs are getting shifted to more digital channels. Mobile Wallets as one of the solution to welcome this scenario.

The classic example for this in AI is a critical tool to improve customer experience i.e. facial recognition technology, which is 10 to 15 times more accurate than human beings at identifying people. Innovation, which is fueled by advances in computing power and connectivity, the fields of robotics and artificial intelligence have grown rapidly.  The amounts that have been invested so far by FinTech disrupters are still relatively small and incumbent banks and finance companies will also start adopting some of these technologies.


FinTech Provided Banking

As rightly said by many experts in interviews and on their blogs, more transactions yield more revenue. Actually, they mean more transactions out of data which gets collected at the backend.

Financial inclusion is all about accessibility and affordability but the FinTech aim is not the same. In this era of service excellence, we need to put ourselves in customer’s shoes to gain and get the correct experience. Some FinTech companies offer convenience and as a result, they are attracting more customers. While banks even if they claim to be cheaper in some cases but they have fewer customers as they lack innovation, creativity, convenience, accessibility, availability and affordability.

Financial technology, also known as FinTech, is a line of business based on using software to give financial services. Financial technology companies are generally startups founded with the purpose of disrupting incumbent financial systems and corporations that rely less on software. FinTech keeping Artificial Intelligence and Data Science in basement becoming hero, most advanced,  innovative and transformer for payments world on top-level.

Coming back to financial inclusion which extremely sensitive to cost and convenience also getting familiar with AI, DataScience and BigData to cut cost and offer more affordable services. Because affordability is the need due to the fact in most cases the target segment was excluded by the financial institution for various reasons like remote location, economical standards, informal environments. In some cases, they were forced out due to KYC needs and account maintenance fees.

FinTech keeping Artificial Intelligence and Data Science in basement becoming hero, most advanced,  innovative and transformer for payments world on top-level.


Welcome FinTech

There is a very old philosophy of door knocking by opportunity and making a door for the opportunity but the way I see this is totally different. The first scenario – Knock Knock … who is it FinTech… Bank (Feeling very lazy and suspicious)…. shut the door on its face. Now look at the second scenario – Knock Knock … who is it FinTech …. MNO …. Got excited, welcomed with open heart and arms. Because Fintech was never treated respectfully by banks so now Fintech is killing banks but not banking.

Over the years, the Fintech industry has acquired extensive experience in addressing Africa’s business, consumers and technology challenges. Not stopping but continuing broadening the boundaries and scale to improve people lives. By providing and developing a broad range of innovative solutions and services. On the other hand, banks with their restrictive approach when it comes to onboarding customers, It means that in this world all typical bankers have failed to understand/set up the change in the basic business model because of their restrictive approach.

Mobile payments under the FinTech market will grow exponentially. We are sure that both players will adopt the mobile device (To run on internet/data based mobile apps) or real mobile phone (To run on GSM/3G/4G network) as an official and convenient gateway for their financial requests and we will see unlimited options and innovative solutions that are built and based on mobile handsets.


Banking or Bank or FinTech-King

I am very comfortable in saying this “Banking is needed not the banks, Fintech is killing banks, not the banking”. Banks need to accept change, become Fintech partners and its time to come out of their 100-year sleeping mind/blindfolded approach to customer’s banking need otherwise banking will only survive but not banks any more. Since the mobile payment era has just started, it is still too early to answer this point and nominate the winner, we will need to wait and see how it will go but I think we will somehow end in a stalemate, which is not at all pleasing for one type of role.

Leveraging digital channels and operations will allow banks to also cut the cost to serve the market, whilst acquiring new customers and increasing profitability but bankers still think it’s not enough and they still need a compelling digital value proposition, incorporating financial and non-financial needs that will help customers grow their businesses and improve their own needs.

Demand for upstart services is strong, piqued by widespread frustration with big banks; supply was/is growing, fuel in part by financial types itching to do something. Low-interest rates have made capital, the raw material for many money-related startups, cheap and plentiful.


Pain or Cost – Will go with little Cost

Convenience among other things focuses on how easy it is to use MFS or FinTech agencies fruits, how easy it is to send and redeem funds. The network of the MFS etc. Thus subscribers are praying for a balance in both and FinTech taking full advantage to act like a god. The more innovative banks are lesser than the need for other solutions.

Fintech is doing its role very effectively even joining forces with the new competition. Neither banks nor any other stakeholder can do it alone, to get to scale and truly build long-standing relationships with the different segments, collaboration with a range of ecosystem partners is absolutely critical.

Cross-industry partnerships present an opportunity to offer complementary financial and non-financial products which service providers might not have been able to offer otherwise. So here comes Fintech please welcome it.

Fintech industry came to life and became one of the Most Promising Industries of 2015 and looks very confident to continue in the same light in 2016 and a few years more. “It wasn’t an interesting space to be in just in 2012 as I recall. “The view was that there are just such strong monopolies there in terms of the existing banks and no one’s built a successful payments company since PayPal and plastic money companies.”


Financial Services Intelligence – Payment Intelligence

MaRS’ Financial Technology (FinTech) Cluster connects the financial services sector with startups developing next-generation technology in emerging payments, financial services, peer-to-peer transactions, alternative lending and crypto-currencies. Fintech startups are the most comprehensive set of resources across the world and their vision is soothing to the world and people life that gave it another reason to live long and grow in folds. Killing everything that comes in way of innovation.

Through a strategic network of partners, technologies, tools and people with the vision the FinTech entrepreneurs with rapid validation, access to investment, product feedback, sales opportunities and business advisory services.

In that time, it was seen as a highly technical highly regulated industry dominated by giant banks that resist disruption, other than the occasional global meltdown; finance is now riding an entrepreneurial wave. financial technology as “innovation in financial services” at first targeted the banking and insurance sector as potential business sectors to disrupt. If you tried to open a new bank account you will be requested to deposit a sum of few thousands in case of Asia and in Europe & Americas few hundreds in average-of your local currency, while with only a few cents you can get your self a new SIM card and start transacting immediately.

FinTech companies often face doubts from financial regulators along with tough competition from established players. The online financial sector is also an increasing target of distributed denial of service extortion attacks. This security challenge is also faced by historical bank companies since they do offer Internet-connected customer services.


Why FinTech

Despite all challenges, issues & natural and industry created bottlenecks, FinTech is experiencing tremendous growth. FinTech is on the rising boom within the sector is exponential. FinTech startups enabling services like peer to peer money transfer, instant payment for goods and services with help of mobile device based services like Mobile applications, USSD, NFC, QR Codes etc. And lending services are also on the rise. FinTech companies got billions of us dollar funding in just last 12 months which is a very clear sign of confidence and a bright future.

FinTech present enormous opportunity for entrepreneurs in Insurance and shows that incumbents are recognizing the potential for startups in the insurance sector. Despite being such a large industry, insurance remains one of the highest cost areas of financial services.

Banks have to follow compliance policies in true spirit. Telco’s business is not hard on compliance so they don’t care much compliance & regulations. Compliance & regulations adherence is one of the reasons banks will never be successful until they revise the compliance strategy according to market demands otherwise they will be struggling. Fintech is transforming technology, financial industry and people life but Marketing is another challenge faced by most of FinTech companies; as they are often outspent by larger rivals.

FinTech a sweet dream – It is the delivery of financial services at affordable costs to sections of low-income segments and informal sector of society, in contrast to financial exclusion where those services are not available or affordable. The concept of daily banking or transactional banking relationship to one in which banks will offer a variety of digital services that will increase the daily interactions of MSMEs. But to get to the honeypot, the signup procedure needs to be online, fast and simple. Credit decisions need to take minutes, not days. Customers need to be able to conduct their business as efficiently and productively as possible. 

Question is – “Is it possible to separate banking from banks?”, it’s like pulling blood out of a living body. The answer is known and it brings sadness for some and happiness for some, yes it’s happening already.


Points to Note:

All credits if any remains on the original contributor only. We have covered all basics around mobile payments security and the importance of mobile payments data. In the next upcoming post will talk about implementation, usage and practice experience for markets.


Books + Other readings Referred

  • Research through open internet, news portals, white papers, notes made at knowledge sharing sessions and from live conferences & lectures.
  • Lab and hands-on experience of  @AILabPage (Self-taught learners group) members.


Feedback & Further Question

Do you have any questions about AI, Machine Learning, Data billing/charging, Data Science or Big Data Analytics? Leave a question in a comment section or ask via email. Will try best to answer it.


Sign-tConclusion –
FinTech faces issues on convincing the controllers and often hit hard by regulators, as there is no such thing “Ministry of innovation” which is actually support them. Data security is another issue regulators are concerned about because of the threat of hacking as well as the need to protect sensitive consumer and corporate financial data. Any data breach, no matter how small, can ruin a FinTech company’s reputation. So is it a sweet ravage of FinTech from banks or some other agenda; I guess we all need some time to wait and watch this space. Well said by someone somewhere on the Internet may be by payment research managers/innovators “Apple does not care what the banks think. Why should they? What do banks have to offer them?”. This was when Apple Pay was launched.

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Posted by V Sharma

Technology specialist in Financial Technology(FinTech), Photography, Artificial Intelligence. Mobile Financial Services (Cross Border Remittances, Mobile Money, Mobile Banking, Mobile Payments), Data Science, IT Service Management, Machine Learning, Neural Networks and Deep Learning techniques. Mobile Data and Billing & Prepaid Charging Services (IN, OCS & CVBS) with over 15 years experience. Led start ups & new business units successfully at local and international levels with Hands-on Engineering & Business Strategy.

One Comment

  1. Charanjit Singh June 18, 2017 at 03:00

    Very Nice Article sir. Great job!!



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