What does a FinTech disruptor really look like and does it pay?
January 23, 2019 - 3 minutes read
Posted by James Spencer
Financial technology, often referred to as FinTech, is a fast growing area of the financial services sector and is increasingly becoming a part of people’s lives. The term describes a variety of financial activities, encompassing computer programs and other technology used to support or enable banking and financial services.
In fact, the EY 2017 FinTech Adoption index shows that a third of consumers use two or more fintech services. Since this number has risen from one in seven in 2015, it’s likely that more than a third of consumers are using FinTech at the end of 2018.
FinTech firms share two central traits: a desire to apply innovative technology and a laser-like focus on the value of benefits a customer will receive. These points are powerful differentiators in a financial sector that many consumers find tough to understanded and is synonymous with fiddly paperwork rather than a seamless customer experience.
FinTech has disrupted the industry as a whole. Consumers have come to expect easy usability across the industry, whether in banking, financial planning and insurance. Companies and firms who have adopted a FinTech approach have tended to stay ahead of the curve, while those that haven’t have risked stagnating and having a rigid consumer experience for their clients.
FinTech has numerous benefits for consumers. These include a faster service, the ability to easily ‘take matters into their own hands’, lower cost and to bypass long established charges, such as how WeTransfer can cut your currency transfer fees.
Why has FinTech been such a success?
Fintech is shaking things up because it meets a market demand. In 2018, customers expect the absolute minimum friction when they engage with a service. Fintech companies achieve this whereas old ways of doing business inevitably involved friction from time to time.
What’s more, FinTech also responds to the preferences of younger, tech-savvy generations. The EY FinTech report shows that 25 to 34 year olds are the largest adopters of FinTech. This generation, who are likely to be so-called ‘digital natives’, are likely to prefer to manage their wealth through digital channels.
Who are the stand out FinTech firms?
For many around the globe, getting a loan isn’t easy. In emerging economies, banks are sometimes reluctant to provide loans because of a lack of data to assess the risk on loans. Lenddo uses non-traditional data to provide credit scoring and verification to economically empower people around the world.
Lenddo are an excellent example of a firm who have used technology to change people’s lives, by giving them the means to access life-changing capital. So far they have dealt with 5,000,000 applicants.
Trulioo is an identity verification software that allows FinTech firms to operate online. It lets them follow a wide range of international regulatory compliance requirements, including Anti-Money Laundering (AML) and Know Your Customer (KYC) rules.
Trulioo has been a massive success. Although you might not have heard of it, you’ve probably used it at some point. The company has provided online verification for 5 billion people in over 60 countries.
Kofax are a FinTech company which enables banks, insurers and other financial companies to digitally manage their documents online and automate digital ‘back office’ administration tasks. Kofax has been central to the digital transformation in the professional services sector. Globally they provide services to 10/10 of the largest global banks, 9/10 of top global insurers and 4/5 of the largest logistics companies.
While we’re not a FinTech firm, at Xentum we use technology throughout our business to deliver the best financial planning we can. If you think some FinTech inspired financial planning could be the right thing for you, get in touch with us.