“How to predict the future of fintechs?” is a frequently asked question in the financial press and online. In fact, this is one of the hottest topics around the globe. With all the talk of globalization and the problems caused by the rapid spread of technology across the globe, financial institutions are struggling to keep up with the changes. What most analysts agree on though, is that financial institutions will need to adapt their business models to the current trends.
The key areas of focus in analyzing fintech trends are security, regulation and innovation. To start with, analysts and bankers are paying close attention to regulation. Governments from every country are putting in place rules and guidelines for financial institutions. While many have been created to address similar issues across the board, it is important that these rules and regulations remain up-to-date, as well as balanced with the innovation of new technological platforms.
Innovation is the hot topic as well. Innovation has been a major force behind changing consumer behaviors over the years. While fintech trends may cause some consumers to switch back to traditional financial services, analysts claim that more consumers are turning towards online services. This is due to a number of factors. One being the ease and convenience of doing business online, something consumers have become accustomed to over the past decade.
Another reason why online-only banks are becoming popular is because of the high cost of maintaining a traditional bank infrastructure. For example, there are only so many branches in an average city. In addition to this, there is very little room within the existing infrastructure to accommodate a high-tech network infrastructure. These factors all contribute to the high costs that traditional financial technology businesses have. However, the trend toward digital-only banks is causing them to lower their overhead, which ultimately increases their profit margin.
In addition to the cost reduction of a traditional business bank, there are also fintech trends stemming from the Chinese government and state-sponsored money transfer programs. China has been one of the leading sources of offshore investing and development for the past several years. The Chinese government is starting to open up its domestic banking system to foreign companies, and more companies are starting to look at these sources to expand their business presence in the United States and abroad. According to the Chinese government, it is important for Chinese companies to be able to conduct international business with the help of U.S. banks, but many of the current Chinese start-ups cannot afford to hire a high-priced banker or finance officer, which is forcing them to rely on nontraditional options, like non-traditional banking and money transfer solutions.
As mentioned above, the Chinese government is starting to open up its domestic banking system, and many of the nontraditional banking options that are being looked at involve providing financial services offerings to Chinese-dominant businesses. According to the Chinese government’s plans, Chinese-dominant organizations would help sponsor local development projects in the country. The Chinese government is also exploring ways to expand the use of mobile money transfer options to facilitate remittance solutions to the domestic Chinese business market. As more nontraditional financial services offerings made by fintechs enter the Chinese marketplace, the Chinese government is looking to reform the Chinese financial software market in order to make it more Western-style and to reduce the risks involved with Chinese investment. The Chinese government has also stated that they are not trying to completely cut out the use of Western technology when it comes to Internet access, but are simply trying to make more of an effort to make the information available in a more accessible format.
At this point, it appears as though the fintech trend in China is going to focus on offering more value and more solutions to customers. This means that more financial institutions will start to offer more customized solutions to customers and to focus on improving their overall service and experience. Financial institutions will be looking to partner with these new players, because they are realizing that a good customer experience can only happen if the business relationship is a good one. It also means that they need to make sure that they are able to adapt to any new changes that the Chinese financial services offerings bring.
In the end, trends like these are going to impact the banking industry in many ways. The biggest impact will come from the changes in the mindset of the average bank employee who is tasked with helping clients manage their money. When a bank employees’ mindset changes, it can be difficult for them to recognize trends like these. However, with the right attitude and the right tools, financial institutions will have no problem staying ahead of the trends that are shaping the economy.