FinTech - A True Fairytale

Abstract -: Idea for this post to find out from all of you through comment on the subject what are the views on FinTech park. What sort of story they make or write, what benefits and new services the baby from IoT & FinTech will bring on table for consumers, businesses and entities like banks, MNO and financial services institutions. If you are keeping track of all the mobile payments announcements, you will notice & realize; every other day a new company throws its ball into the mobile payments field. To top-up the excitement please note almost every new player joining here is a fresher i.e. no payment industry experience but has very high motivation & inspired to become FinTech company with IoT flavour.

Almost all players who entered into payments in arena of FinTech domain are actually coming out of this game park with zero or no knowledge. This is giving too much innovation to put idea on table but takes longer to make it reality. Technical companies entering financial domain and making it interesting by doing technical integration, or “fintegration”, of fintech services, the latter interfacing directly to bank customers for banking services.

Introduction -: FinTech is now joining hands with IoT to bring more and more new services. Payments look really easy to all new FinTech companies as they keep rolling fintegration, which is why innovation is hard but now IoT joining hand with FinTech to bring easy and cheaper solutions to market. Imagine one is way to hospital due to any illness and your smart watch or your smart belt detects your health. On your way your smart device send information to hospital so that they can be alerted to make arrangements. In the side smart watch also sends signal to your wallet or bank account to ensure liquidity is ready as well. All your treatments gets paid in auto mode and you come back well and healthy without getting into hassle of running with bills to clear or medicine prescription to buy them from store. Life any ways will not remain same 5 years down the line from now at least for these who are able to earn their basics with little luxury without much issues or hassles. 

In developed economies, payments works really well, fast and very effectively. Consumers walk up to a point of sale terminal in a store or to ATM machines to withdraw cash / swipe their plastic; the transaction goes through in a matter of milliseconds. What could be so hard about that? Why do we need Mobile Payments or FinTech Payments or IoT based payments well answer lies in last paragraph it self. Hope you got it. It's trying to solve for a payments problem that really doesn't exist today - and then do that at scale. We all know giving innovators access to capital - with interest rates on money near zero does not make any sense even. Neither it’s ever been easier to access freely.

Main Story -: Faster payments is a solution to which problem does any one really know or ever thought of. New challenger banks and FinTech companies will most probably focus on a single high-value financial offering, allowing them to establish clear price or quality differentiation from a broad commercial bank.  The emerging IoT based FinTech economy will enable access to data assembled by another application or monitoring a customer activity that is worth observing. Exciting times ahead right? Surely, Asia and Americas are catching up behind Africa and Europe. FinTech as one of the world's leading and disruptive technology in the arena of banking (excluding banks) & financial services making & writing stories everyday. With every new startup firm and attracting sizeable investments through crowdfunding. 

IoT is right in the middle of the buzz around FinTech and establishing its partner. There's always money in working with money and the fintech sector is still one of the most exciting areas in tech. With waves of startups disrupting centuries-old financial institutions, embracing mobile technology or utilising the sharing economy and crowdsourcing ideas, innovation in the space is thriving. Financial services was the first industry to support and make-over to encirclement automation and computerisation much before the 90s. From payments processors to alternative lending firms to automated investment services, fintech startups have become attractive for a number of reasons. IT systems, mainframes, multi-processes and all kinds of computers and applications being used in last 3 or 4 decades. But sadly wave of that era got frozen into thick, hard and never melting iceberg to allow another wave. There was no “second coming” after the initial revolution which is now fintech is trying to break and revloutionise.

In 2008 fintech got born in real sense or concept was started and subject matter experts of technology saw an opportunity. This was the same period when global financial crises were on optimum level and banks were unable to use their deposits or any money on any innovation or any new concept / product to over come the issues they were facing. From 2008 to 2009 this space was looked and incubated in test tube and 2009 it came on table. From 2010 to 2013 the child turned to a teenager with rocket speed and investment went up 4 to 5 folds. In my last post on January 1st 2016 on Linkedin, I did mentioned (https://www.linkedin.com/pulse/fintech-wave-pass-opening-vinod-sharma), about investments made in this segment from 2014, global investment in financial technology companies tripled from 2013. The trend continued in 2015 when  another tens of billion us-dollars were invested in. 2016 looks very promising to follow the same trend. This was because banks were unable to use any money on innovation, as they spent it on new regulations in order to satisfy regulators.

Fintech companies have come up with innovative technology that give solutions. They have enhanced efficiency in the financial system. On other side Insurance was silent follower of fintech which now planning to explode in 2016. Other companies in same path are dealers in stock and trading areas, P2P lending, crypto currency payment, cross border money transfer and transfer payments amongst others. Fintech provides better choice for users which is much more efficient compared to banks and that too on time & place consumer wants in a secured way with greater accessibility. The technology has given consumers a better banking experience (To experience same banking services where banks failed) as the system is able to analyse consumer financial behaviour & rating for trending & decision on the fly. The rise in the number of international migrants reflects the increasing importance of cross border money transfer services, which has become an integral part of our economies and societies. FinTech gave rocket speed to same. 

Banking and Financial Services software Integration and enterprise architecture blue prints provides better, full view and accurate customer data (Part of Big data) under fintech domain to bring the best Banking through Technology to create joy and remove the pain of creating large, tedious and bulky Manuel files to the single customer view. 360 Degree visualization and containers of those such views are now possible for betterment as now we say “digital banking is now a given” not a selective choice any more. Countries like India where transaction volumes are very large, though the values are much smaller. So, in order to have a viable proposition, solution has to be a very low-cost, much faster then traditional setup / process and that's the strongest point of fintech

Low-cost model cannot be managed unless there is enough technology behind it to give it wings for speed and enclosure of safety and security. FinTech took advantages of technology which can manage volumes easily. Keeping speed as close as to eye blink and cost of delivery to ground was the major achievement for fintech and given the thrust on inclusive banking, one of the imperatives that delivery got technology-driven. Importance of digital banking is very high with people in 30 to 40 age bracket generation which is very technology savvy. Allow me to say Banks are data informed but fintechs are data driven. The difference between being data-informed and data-driven is well known and what impact it makes on people life is visible and seen in Africa under mobile money (Financial inclusion).

Conclusion -: FinTech allowed many startups to run within a single product line and in excellent synergise environment. Before, startups usually walled off from each other by putting themselves in silos or in secrete rooms. Now you don't need to spin up a secrecy for anything as all of them are working on almost similar idea and innovation. You can run multiple startup ideas in one environment. This means no longer needing tens or hundreds millions funding. From automated payments processors to lending firms, financial tech companies are poised to snatch away few trillion dollars from banks by providing better banking services.

Banks are on high alerts and many have started coming out of their age old sleep but with pace which is very very slow or almost negligible. Faster/quick/swift payments is a solution. But what's the problem? Investor protection against back drops and fraudster are rapidly on raise with help of advance technologies. The first is that the rise of these non-traditional payments innovators doesn't necessarily mean the demise of some of the biggest names in payments. Many of them are on the list, too – Plastic Money companies aren't suffering at the expense of these innovators. Payments is becoming invisible. In fact, it's quite the contrary. The tracks they've laid over the years and the innovations they've made to the platforms is what's give payments life to these new innovators.