The Growth in Fintech
There is a long historical link between the finance sector and technology, despite the reputation of banking as a large, slow-moving, legacy industry. But it is the speed of development in technology over the last decade, compounded with consumer demand for more innovative, always-on services, that has created an opportune moment for technologists operating in this space.
The financial sector has witnessed transformative technology over recent years, including contactless payment, cryptocurrencies, digital wallets and the surfacing of blockchain. The emergence of modern Fintech is quickly changing the way that banking is done by consumers, and how financial instruments are traded by capital market participants. And that means a shift in competition globally.
Global Fintech investment rose from $US 100 million in 2008 to $US 31 billion in 2017 (Ian Pollari: The Rise of Fintech,Pulse of Fintech), and shows little sign of slowing. The real technology innovators in this space will undoubtedly experience huge growth and quick uptake of services, as the banks endeavor to compete on a global scale and strive to stay relevant amongst disruption and challenger firms.
The Fintech innovators are rarely the large banks or traditional institutions themselves, but smaller, agile firms who have identified a gap in the market. They emerge to provide specific cutting-edge technology to solve a problem, improve a process or overhaul a legacy system. Larger institutions are then incorporating hand-picked Fintech services as building blocks for their operations.
Suffering at a technological disadvantage to their competition is an unacceptable position for banks and large financial institutions. To prosper, Fintech businesses know that they must continue to innovate and remain product-focused as they grow. They also must be able integrate their services as seamlessly as possible, while providing a scalable and competitive solution that can last.
Challenges and Opportunities
The issues that Fintech businesses face can seem daunting. For instance, how does a bank allow itself to open its doors to Fintechs who may not have a long history in the marketplace? How can Fintechs demonstrate that they offer the capabilities that can match, or exceed, a bank's need regarding what they want it and when they want it? How can Fintechs fore promise a fully supported technology to a bank, when they’re at a crucial growth stage with low cash reserves?
To compete, Fintechs must overcome the ordinary operational growth challenges within their organisation. Building a solid business in parallel with developing innovative technology will be the key to sustainability, winning deals and retaining clients.
To overcome the concern of service assurance, a Fintech needs to show what they have to offer:
They are lean, innovative, and flexible. Unlike a bank, Fintechs do not necessarily need a lot of architecture or large physical systems to operate, although they do require skilled staff.
They focus on specific segments within the value chain. For example, if a bank wants a Fintech to address only payment transactions, then that is what they can and will do. A Fintech solution is not an all-or-nothing solution, but one that can be very customizable and business-specific. It also allows Fintechs to work in tandem with banks instead of against them.
They are affordable. Given the rise of the Fintech industry and the ability to adapt to a bank's specific needs, implementing a Fintech solution can be very affordable in the overall business landscape. This lets the banks focus on what they do best, while letting Fintech focus on their areas of expertise. This creates better business practices and increased client satisfaction seamlessly.
They are available when problems arise. The nature of technology is not 100 percent reliable. It is incredibly important that Fintechs can offer adequate support for their product in a live environment, post-sale. And the more critical the technology to the bank’s operation, the most crucial post-sale support will be. This will determine if the business is built to last, and will retain its clients.
Growing a Skilled Team, Affordably
For a fast-growing Fintech, having qualified client support available 24/7/365 can be a challenge, a careful balance between managing budget implications and client expectations. In addition, finding experienced developers and skilled engineers can be tricky, and competition between employers is high, which can quickly drive up the costs of infrastructure management.
The need for scalable technical resource is essential for a Fintech’s growth, and overseas outsourcing is fast becoming the affordable and sustainable solution.
As a Fintech, it may seem near impossible to find partners who can help to support your cutting-edge technology. With RPN, our team become an extension of yours, so it’s no different to training internal staff, except the overheads are lower and the employee salaries are managed through one single monthly invoice.
We keep costs low through our headquarters in the Philippines, and our service-level high through specialist talent resourcing and competitive employee-benefits. Read here for more information.
If you feel your organisation could benefit from our services, please get in touch.