Fintech today is about moving fast and not breaking things, which is why firms are frequently let down by not enough ‘fin’ and inadequate ‘tech’.
The idea of fintechs using technology to make financial services more efficient isn’t a new one. Since the 1970s at least – the era of mainframes, the birth of SWIFT and scaling of Mastercard and Visa – financial firms have been using technology to make services better, faster and cheaper.
So, what’s new about fintech today?
In a word: technology. It’s ubiquitous and can deliver more than ever before. The average person has more computing power in their smartphone than the guidance system that put man on the moon 50 years ago. And the internet has made it possible for every human on the planet to be included on a network.
The potential to launch more personalised, more inclusive financial services faster is huge and has caught the attention of policymakers, NGOs and the private sector.
More personalised – better data from a wider range of sources, including social media activity, web browsing and mobile phone usage, allows fintechs to better tailor their offerings to individual customers and needs.
More inclusive – digital financial services are quicker and cheaper to deliver, which enables fintechs to target previously under-served markets and customer groups and include them in the financial system.
Faster – whether it’s launching or iterating products quicker, or completing transfers and loan approvals in seconds rather than days, financial services faster delivers social benefits and economic prosperity.
More choice – technology can lower barriers to entry, particularly when part of an as-a-service proposition, which in turn leads to more competition and more choice for customers.
Fintech today: moving fast and not breaking things
So much for fintech in its cultural context, fintechs themselves want to move fast, but not break things. This is finance and other people’s money after all. Great ideas must happen within a regulatory framework.
Fintechs want to launch and iterate quickly. Gone are the days of spending months or even years developing a product or service. Then launching and leaving it in-market until it’s obsolete or withdrawn. Today it’s about incorporating new features, functionality and feedback to create maximum lovable products, which just get better over time.
Fintechs want to create modern, safe, resilient products and services. That means innovating new business models, building the trust of customers and regulators, and minimising the cost and risks of change. That’s easier said than done when customer expectations are changing, regulation is dynamic and competition fierce.
So, fintechs want to collaborate to get things done. They’re looking to build new, symbiotic relationships with customers, suppliers, partners and other third parties. Competition has given way to collaboration or co-opetition (the act of cooperation between competing companies) at the very least.
This is also the main challenge. Fintechs are being let down by their partners. The lack of access to existing and new services, as well as the quality of these services, is damaging fintech businesses, a ClearBank report found.
It’s a case of not enough ‘fin’ and inadequate ‘tech’. When it comes to the ‘fin’ part of fintech, 33% of fintechs have faced intervention from the regulator. And as to the ‘tech’, 15% of fintechs have delayed the launch of a new product and 5% have seen services go down.
How Monavate can help
We’ve found that our customers have great ideas. But in a complicated, regulated space like financial services, they can quickly get bogged down. Monavate cuts through this by offering BIN sponsorship as a fully managed end-to-end service.
Use our e-money institution licence and membership of major card schemes for faster, cheaper, hassle-free launches. Leverage the compliance, scheme and regulatory expertise that we’ve baked into our ‘fin’ and the security, scalability and functionality of our ‘tech’.
We’re open for business. If you’ve got a great idea for a financial product or service, contact us here.