It’s been well documented that the financial services industry needed some form of disruption and a move away from the traditional models. The industry as we know it has become too out-dated in the modern, digital world that we now live in. True product innovation, improved customer UX/UI were always going to be a problem for large financial institutions to manage and rectify. FinTech was seen as the holy grail to address the bulk of these issues, and for the most part there has been some progress.
I’ve been fortunate to work closely within the FinTech ecosystem in Singapore/APAC and now presently here in India. The hype to a certain degree is still there but I feel after the last 12-18 months, this has reduced from before. It’s also worth noting that venture capitalists and investors have equally been reserved from a funding perspective. We’re definitely seeing signs of a slowdown, which is why it’s vitally important that those start-ups continue to focus on building solutions which address tangible problem statements. I don’t necessarily subscribe to the viewpoint that start-ups are purely in this market to create momentum and publicity, with a view of being bought out by a bigger player.
Working closely with the banking community in APAC, they themselves are very keen to try and address a lot of the reasons FinTech start-ups exists and what they’re trying to do. It takes a brave financial institution to admit they have problems in certain areas, are willing to accept change and to be more collaborative in order to rectify them.
We’re now deep into collaborative FinTech amongst the community of start-ups, banks and insurance companies. This collaboration (via innovation sandboxes/use of development API’s) is a positive move and I’ve certainly witnessed this first hand, with some meaningful proof-of-concept solutions co-created within innovation labs/accelerator programmes. The focus being on the consumer, providing them with an engaging product/service, a great experience and fit for the digital age we’re now in.
In terms of the future for FinTech – I don’t see the bubble bursting, but I do see it getting smaller, we will see some form of rationalisation and a different landscape. This may well be driven by a number of factors, regulation will no doubt play it’s part, specifically on a region-by-region basis from my understanding. The net result will see the established financial institutions and only a handful of start-ups which have survived, co-offering the next wave of solutions to business and consumers.
We may also need to consider the other major technology companies, such as Google, Amazon, Apple and Facebook making a play into the banking world. We know that these organisation are adept at capturing, managing and monetising business and consumer data. This is a real threat to the traditional banks and as such, this is where their focus should be targeted, esp. at the millennial and upcoming generation Z customer segments.
There is a great quote taken from Walter Wriston, a former CEO of Citibank (1967-1984)
“Information about money is more valuable than money”
This quote is still true today and will continue to be so.