FinTech – A few years ago, a captivating conversation on FinTech stirred my curiosity. During this discussion, a straightforward yet profound question surfaced: “What are the ABCs of FinTech?” Although seemingly simple, the question was challenging to address. In my attempt to simplify this complex concept, I crafted a concise explanation, defining FinTech as a technical tool designed to bolster financial services. Receiver was not happy so I decided to answer this today with mind of sharing “What is FinTech”.

What is FinTech

Financial technology, also known as FinTech, is an economic industry composed of companies that use technology to make financial services more efficient. The reason it is so inherently difficult to define the concept of fintech is because definitions change over time. Alternatively, traditional banking organizations are hindered by legacy operating systems, capacity to innovate, agility, and technology expertise.

FinTech Circle

The word “fintech” actually made its way into the Oxford dictionary and is defined as “computer programs and other technology used to support or enable banking and financial services”. Turning to Wikipedia, it defines “financial technology” as “a line of business based on using software to provide financial services. Financial technology companies are generally startups founded with the purpose of disrupting incumbent financial systems and corporations that rely less on software.”

Brexit!, Britain decided or voted to move out of the European Union, and one wonders whether people who voted for it actually understand and did their homework on the impact it will bring, negative or positive. Guess should not be discussed here at all, but surely the impact related to the fintech world is of great concern. London, usually (or was now) considered the capital of FinTech, was considered, at least if not fully, a global trading hub for over 500 years, with the Roman Empire once extended to it.

FinTech had found a cozy home in a city that had access to all that FinTech needed to prosper: resources for innovation, traditional financial services, the digital world, innovative tech talent, capital as raw material, collaborative support, progressive regulatory powers, and a seat at the European and global table. It seemed to many that the ‘Brexit’ vote was a vote that threw all of that away. As people who worked in FinTech and as those who made their lives in London, what did this vote mean for the future of our businesses and the lives of our friends? Anyways The idea of this post is not to focus too much on Brexit but on FinTech and where FinTech lives.

CashLess Or Less-Cash

The RBI (Indian Reserve Bank) encourages greater use of electronic payments by all sections of society so as to achieve a “less-cash” society. The government can help fintech firms in many ways other than by giving them subsidies or investing in them. Introducing startup-friendly policies and regulations, lowering entry barriers, and creating a required talent pool to support these firms are just some of the initiatives to achieve a “less-cash” society.

In financial services institutions, Chief Financial Officers (CFOs) and Chief Technology Officers (CTOs) play a key role in managing cost-control initiatives in line with growth plans. They are in the driving seat of many such initiatives that not only have a bearing on the profitability of the organization but also its long-term sustenance and stability. Decades of existence as the central pillar of the financial ecosystem have made most financial institutions slow in growth and equally slow in lowering costs unless driven to. However, the emergence of fintechs has shaken this landscape drastically, forcing banking organizations to transform and retain their financial stronghold.

Start-ups do not have legacy technology systems or large brick-and-mortar infrastructures that can be costly to maintain or change. Nonbank innovators may also have specialized technical knowledge, experience, and skills with respect to emerging technology and trends. By employing their respective advantages, banks and nonbank innovators can benefit from collaboration. Through strategic and prudent collaboration, banks can gain access to new technologies, and nonbank innovators can gain access to funding sources and large customer bases.

Can you define FinTech?

None of the definitions provided above for FinTech are right or wrong as such. Defining fintech is both an easy and a difficult task. If we are to consider one payment element, which can be defined as “an action done by the acceptor of goods or services in the form of cash handed over or funds transferred through a credit card or online or internet method, Where mobile devices are used, that is called mobile payments. In one line, completion of a process of exchange of goods or services with money (any form), the action or process of paying someone or something or of being paid.” FinTech actually steps in to make this process seamless and easy.

There is a need for certainty on what we require, either banking from banks or banking from Fintech, despite the proclamations of some visionary FinTech founders that banks aren’t disappearing anytime soon.

The engines under the hood of big banks—compliance and money-transfer systems—are simply too difficult for any startup to replace, which is why tech players like Apple Pay are still built on top of existing bank systems and payment rails. Banking, Payments, Remittances, Fintech (itself), Commerce, Mobile Financial Services, and New Coins (Bitcoin, etc.) are integral parts of “A Fintech”.

To maintain the dominance banks have enjoyed up to this point and retain the luxury, banks need a radical redesign of their customer-facing assets. If banks fail to overhaul their exteriors to offer a personalized, best-in-class product experience, they will be relegated to supplying the engine for sleeker-looking tech companies in 10 years’ time.

If I merge logic with magic to make it malegic (my logic), and with the same methodology, I can comfortably say “A Bank” does not belong to any company, investor, or individual; it belongs to customers who have made it what it has become because they played professionalism, personalization with diligence, and fairness, but unfortunately not any longer as with time, KING (customer) demand and needs change. In modern times, banks have gone under receivership, forcing consumers to resort to either mattress banks or find a better alternative.

FinTech – A Paradigm Shift

The digital money under FinTech remain firm from a tsunami that poised radical change to almost every industry, banking hall, brands and chopped off the plans of progress. FinTech helped and pushed digital currencies to the level where it has changed the way people pay and get paid. Mobile network operators (MNOs) can now piggyback on their existing networks to offer financial services, which were NOT originally in their strategic plans when they were formed. This was an opportunity that presented itself and found the mobile operators ready to grab it.

Banks initially raised issues in that cellular operators were now offering banking services and yet they didn’t pay for the banking licenses or were not registered financial institutions. Rather than accepting the fact and appreciating the innovation banks became crying children’s. The hectic pace of change in payment systems – online, mobile, virtual wallets and smartwatches, among others – means that all businesses need to remain alert to the latest trends and developments, whilst banks said who so ever is dreaming this must be smoking too much weed.

Fintech lives in entrepreneurs office’s irrespective of their geographical locations. Fintech and their customers are paying for goods and services in new ways which is still a future for many banks. The new ways will continue to change and proliferate as time goes on. Mobile Payments are expected to explode beyond 3 trillion euros by 2020, Mobile Money savings beyond 2 billion USD for a few African countries. Mobile Money is not just cash-in, cash out via agents any more or P2P money transfer. Africa has given new and very different dimension with speed like the blink of an eye, getting Money from Asia, UK or anywhere in the world within seconds around the world, 24X7 directly into wallets, facilitating bill payments, merchant payments, loans, insurance a never-ending story. “It wasn’t an interesting space to be in some time back.

Fintech brought a significant change in an industry that as recent as last few years back viewed Fintech firms as competitors but 2014 was the fuelling year, 2015 was at the explosion and 2016 started with less speed compared to 2015 with greater emphasis on stability. Back in time, the view was that there are just such strong monopolies, in terms of the existing banks… and no one’s built a successful payments company since PayPal.

Banks should take back seat as a clerk for reconciliations and accounting units and the regulator should allow MFS companies to innovate and bring new solutions and products in no time and make customers life easy, less costly and much much faster, see my post  Why Banks may never be successful in Mobile Financial Services. Technology for Finance long seen as a highly technical, rocket science, highly complex and never to be understandable by rest of the world except few companies or individuals, highly regulated industry dominated by giant banks that resist disruption–other than the occasional global meltdown–finance is now riding an entrepreneurial wave.

Demand for upstarts’ services is strong, piqued by widespread frustration with big banks; supply is growing, fueled in part by financial types itching to do something other than toil inside those same mega-corporations. In today’s time “I don’t think anyone enjoys being an investment banker”. And low-interest rates have made capital available which is a basic raw material for any startup, this raw material for many money-related startups, cheap and plentiful.

Ministry of innovation and regulations need to support a sound FinTech system by addressing consumer protection issues and promoting competition in the marketplace. There is also the danger of the regulatory environment becoming less favourable to FinTech companies. If regulations ease for traditional financial services companies or tighten for emerging ones, the balance of growth could change dramatically. Fintech companies and other nonbank innovators have their own advantages. Start-ups with few investors and one or two big ideas often can sometimes move faster than larger and more established organizations. They can focus their energy and resources on a single opportunity.

Among the key criteria that are used by the Global Finance‘s experts has a strategy of customer acquisition and client services, expansion of the client base, the capability of digital products and success in business development. The term “strategy”, “innovation”, “planning” or “business model”. We use them on a daily basis in our FinTech business, yet we have not established one common string to join them together. Hence, having not one single definition for the word Fintech has not and should not prevent us from using it.

Fintech can manage your money automatically for betterment or wealth front and not pay for investment advice that may or may not outperform the market. Industry & Analysis experts of industry, trade and economic analysts devise and implement international trade, investment, and export promotion strategies that strengthen the global competitiveness of FinTech industries. These initiatives unlock export, and investment opportunities for businesses by combining in-depth quantitative and qualitative analysis with industry relationships. Fintech companies whose line of business combines software and technology to deliver financial services – will reshape and improve finance by cutting costs and expanding access to financial services.

FinTech companies can create a more diverse and stable credit landscape by gathering data from social media and other sources to assess the needs of young businesses and borrowers on the fringes of the banking system. A strategic planning process and framework that illustrates how it starts with the enterprise environment and subsequently collects and analyse all information about the context and company to formulate their strategies. To model the Fintech enterprise, its better use a method rather than make things up on the go. A method guarantees results and increases the productivity, predictability, repeatability and reliability of the business modelling and transformation. What would be part of this method though? It is good to have. Most of the FinTech companies win on the principle of “The ability to relate to people, to inspire and motivate them is what you must ever work on as a leader”.

MNO Charging & Billing SystemsConclusion – FinTech does not live at any specific location it lives in every mind and heart who is willing to make a difference and has the potential to take dream forward. One pager generic business architecture/sense to understand the FinTech’s big picture take a huge amount of time. Its key processes of an enterprise to customise them to create customers enterprise level need of business cannot be done with any regulatory framework. The architecture of needs or generic needs of any subscriber; should be written first before thinking of any regulation. It is very important to differentiate between banking and bank needs. As banking come better way from FinTech companies rather than banks. In some respects, FinTech is being revolutionized by entrepreneurs for entrepreneurs.

Posted by V Sharma

A Technology Specialist boasting 22+ years of exposure to Fintech, Insuretech, and Investtech with proficiency in Data Science, Advanced Analytics, AI (Machine Learning, Neural Networks, Deep Learning), and Blockchain (Trust Assessment, Tokenization, Digital Assets). Demonstrated effectiveness in Mobile Financial Services (Cross Border Remittances, Mobile Money, Mobile Banking, Payments), IT Service Management, Software Engineering, and Mobile Telecom (Mobile Data, Billing, Prepaid Charging Services). Proven success in launching start-ups and new business units - domestically and internationally - with hands-on exposure to engineering and business strategy. "A fervent Physics enthusiast with a self-proclaimed avocation for photography" in my spare time.

One Comment

  1. […] and more as you consider this thinking inside the bank, Steward Bank feels like a fintech startup than a regular bank. Ofcourse they are not without competition in that space as it’s really a global race for […]


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