Banking to be Leading Driver in the FinTech Ecosystem

Mind Commerce Staff

There are many constituents within the FinTech Ecosystem including Digital Payments providers, Business Finance companies, and Consumer Finance providers.

  • Digital Payments include both electronic money transfer and mobile wallet systems. Electronic money transfers includes microprocessor based card that has stored monetary value and software that enables money transfer over the Internet. Electronic money floating does not always require a linked bank account to serve different purpose such as bank deposits, fund transfer, direct deposit, payment processors, and digital currencies.
  • The Business Finance segment includes small entrepreneurs and enterprises that were previously excluded from traditional financial markets. The transaction money usually refers to capital that is intended to support the creation, growth and sustainability of small firms and entrepreneurs. Business finance includes multiple instruments such as debt, equity, grants, insurance, guarantees, development finance, and other risk mechanisms.
  • Consumer Finance (also often referred to as alternative financial service or AFS) provides micro level individual finance solutions outside the traditional banking system such as credit card solution, payday loans, rent-to-own agreements, pawnshops, refund anticipation loans, subprime mortgage loans, car title loans, non-bank check cashing, money orders, and money transfers.

Counter intuitively, banking is the main constituent within the finance industry who needs to realize the opportunity of emerging digital ecosystem.  This is counter intuitive because of the news focusing so much attention on the disruptive aspects of FinTech on existing banking functions such as Blockchain technology disruption via Bitcoin.

The fact of the matter is that existing banks can and will adopt many new FinTech technologies including Blockchain.  However, there are certain steps that banking institutions need to take.

They need to create a digital ecosystem across the operation especially applicable for bank. They need to collaborate with credit card providers, telecommunication companies, FinTech startups, niche providers, and create strategic alliances.

Banks need to create algorithm based banking system to realize the full benefits of the data economy and its potential value for business. They also need to make controlling investments and selective acquisitions of certain FinTech start-up companies.

Apart from investing in FinTech startups, banks need to implement the following steps:

  • Merge different competencies inside the organization
  • Develop platform based modern banking system that is customer focused
  • Utilize voice activated financial assistant
  • Integrate seamless configuration among all distribution channels
  • Leverage big data analytics practices across enterprise
  • Establish digital mobile payment system
  • Create open innovation environment across enterprise

Global Financial Technology (FinTech) Market Outlook and Forecasts 2016 – 2021 provides a comparative analysis between the legacy financial system and emerging FinTech solutions including disruption, potential benefits, and challenges.

The Report evaluates the evolving FinTech market ecosystem including startups, banks, investment companies, insurance companies, and non-financial organizations. The report analyzes the global impact of FinTech and the outlook for specific regions. The report provides forecasts for the period 2016 – 2021.