By financial technology, we mean any technology for automating and improving the usage and delivery of financial services. The core function of fintech is to offer assistance to business owners and organizations for improving the management of processes, functions and lives through the backup of special algorithms and software required in smartphones and computers. In short financial technology is also called fintech!
The term fintech took off from emerging startups and it has now reached a prominent position in the business and investment banking ecosystem. Some core business trends backed the emergence of the fintech environment.
Increased Regulation: With higher regulatory oversight on banks after 2008, fintech had an estimated cost of the largest six US institutions of around $70 billion per annum. Citigroup can alone employ around 30,000 within their compliance division. Besides adhering to banking norms, lender restrictions increased consumer borrowing costs and diminished the ability of banks for offering it.
Thus financial technology investment banking landscape supports the narrative of startups using advanced technologies for disrupting incumbent banks. With the change in scenario, the banks still are widely used in cash-rich and profitable businesses.
About Fintech 2.0 and its Innovation
Till now, the fintech startups didn’t consider widespread financial service disruption. According to the McKinsey analysis, the sample startup data also showed that around 62% of startups tackle the segment of retail banking, with around 11% being focused on corporate bank offerings. The most used functions are payments and its most productive use is for banking through targeted revenues.
Banks are nowadays having a critical response to the disruption of fintech because of budding industry development. All fintech startups focus mainly on the concept of unbundling banks while providing a particular service or product for its outperformance.
How Fintech Transforms Business Scenario?
So far innovation in financial technology investment banking is largely driven on the front-end within the special offering through the improvement of customer-facing financial service facts. A few examples are:
Low Pricing: Lean virtual function with better flexibility through no regulation like a deposit-gathering institution and cash through venture capital lets fintech startups draw customers through their competitive pricing benefits.
Focusing on Branding: Employees with non-conventional banking backgrounds have unbiased perspectives and the fintech refreshes legacy service branding which it tries to upend. Modern tools such as gamification make mundane tasks like budgeting more palatable and exciting for the consumers.
Better Quality of Services: Conventional banks draw customers back by providing services with higher switching costs. Without such luxury, special fintech companies earn trust through referral-based acquisition and offering better services to their customers. Up to 90% of software investment banking companies offer a better customer experience for a competitive edge.
Fintech Financial Services
With more client base, fintech firms validate their products, get feedback and purchase time for the second paradigm: this improves financial services back-end. The finance back end and industry “rails”, consist of established infrastructure required for transacting and interacting with people like clearing (NSCC), messaging (SWIFT), and payment (ACH) systems.
As nowadays more investment banking firms are embracing the capabilities of financial technology, fintech companies have higher technology understanding compared to capital market complications. For preventing fraud and cheating, several technologies use saas investment bankers.
With the fintech environment on the rise, investment banks have to minimize costs and improve their agility. Investment banking future would most likely witness in-class trading platforms supported through automated and prospectively externalized, blockchain offices. Alongside, the front office gets supported through analytics and AI for serving clients.
Behind beautiful applications and better client service, the fintech startup back-end follows similar processes of banks. To incorporate financial technology investment banking, institutions have to identify the appropriate area with the scope for innovation. Secondly, fintech investment banking has the right to select appropriate technology partners. Finally, stakeholders should set up a governance framework inside the firm – one for supporting innovation.
Wellesley Hills Financial, LLC