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The financial industry is going through drastic changes over the last few years and fintech’s speedy acceleration has driven the innovations in financial services.

Technological innovation and finance have long since gone hand in hand. The industry has been quick to adopt technology since the early days of computing and fintech and logically evolutionating from this cooperation being particularly successful at taking advantage of technologies as a starting point for innovation in financial services.

Fintech due to the technologies and innovations successfully utilizes digital technologies streamlining mainstream parts of the financial services. And here is the main differentiating character of Fintech from traditional financial services - Fintech is a superstructure that optimizes the function of a wide range of products, technologies, and business models in one formation. From this point of view Fintech should be regarded as a “thing in itself” - a unifying embodiment of interrelated elements that make up the fintech ecosystem. 

 The fintech market development is based primarily on these stimulating factors: growing customer demand for financial services provided via the Internet and mobile tools, the boundaries leveling in fintech space that boost the formation of united infrastructure, and the high response of fintech to growing customer demand. 

In Lee and Jong Jae Shin in their article “Fintech: Ecosystem, business models, investment decisions, and challenges” (2008), provide the following conceptualization of the ecosystem of a FinTech consisting of five elements: 

1. Fintech startups - it includes payment, wealth man­agement, lending, crowdfunding, capital mar­ket, and insurance fintech companies

2. Technology developers -  big data analytics, cloud computing, cryptocurrency, and social me­dia developers

3. Government - financial regulators and legislature

4. Financial customers - individuals and orga­nizations 

5. Traditional financial institutions - tradition­al banks, insurance companies, stock brokerage firms, and venture capitalists.

The correlation and interrelation of these elements promote the formation of the united structure with unified and interconnected services that disrupt traditional financial systems. The acceleration of innovations such as Open Banking API, Blockchain, P2P Lending, Smart Contracts and Cryptocurrency, and other innovations that optimize the transactions and services due to interconnectedness and collaboration. All elements interrelate being reciprocally dependent on each other and this cooperation brings benefits to financial consumers.

Financial consumers are the drivers of fintech acceleration securing revenue for the fintech companies. From large organizations to individuals and SME financial customers play the predominant role in the widespread adoption of fintech disruptive technologies.

Over the last few years, consumer fintech is in its flourishing phase. And for a significant reason: consumer fintech startups have greatly improved the experience prompting the emergence of different business service models such as B2B, B2C, and P2P between participants of the fintech market (individuals, companies, merchants, and customers)

In B2B payments (business-to-business) where transactions and services are implemented between two businesses, the acceleration of new digital technologies promotes the emergence of B2B partnerships and relationships. B2B for banks and their businesses implies the leveraging of traditional banking by adding fintech elements to it and disrupting and unifying the way services are provided.   

B2B model has been developed with the evolution of Fintech and in relation to banking, the new technologies proved to bring up this model in extensive use. Cutting-edge innovations like AI, Blockchain, API, and P2P lending disrupt the traditional bank services enabling B2B relationships to gain a foot in the payment transaction area due to the capability of fintech to gather and implement diverse services in one place. 

B2C (Business-To-Consumer) model is intended for small businesses and their consumers. B2C Fintechcreates an opportunity to better serve the customer and in banking, for example, consumer banking, which has been earlier considered as a stability bastion in financial services is now going through disruptive fintech influence and is most likely to go through immense changes over the next years. 

C2C (consumer-to-consumer) means that consumers interact with each other in rather than trading cash or checks, consumers can send money directly to each other, instantly and with no charge.

When earlier merchants had to work directly with banks, checkout providers but now the technology is creating new ways to deliver value, lower cost, and improve experiences that’s why it’s predictable that in the B2B space the traditional banking stays immensely behind in comparison to fintech capabilities. As for consumers, the tech-savvy millennials constitute a significant part of fintech consumers what fuels the fintech adoption in financial services. Collaborating with banks offers Fintechs the opportunity to reach a wider and more diverse customer base in both B2C and B2B segments.

Originally traditional financial institutions such as banks are limited by their activity nature. The main objective of bank services are merchants, individuals, and legal entities forming the B2C model.

There are still banks that follow the B2B model and provide services to other banks, for example, the correspondent accounts, loro, nostro accounts - forming the B2B model by interbank relationships. All these services are implied to have a traditional approach to implementation. However, whatever the service range and their provision are there are still no banks that can offer all diverse services in one place. Nowadays the situation requires the interoperability of services in institutions wishing to benefit from a wealth of innovative solutions or connecting to existing financial infrastructure.

Fintech due to its high technologies secures itself a place on the market as a significant player in the B2B, B2C, and even C2C market. 


Fintech vs. traditional banks in providing a unifying customer experience

Fintech’s extensive capabilities comprise the organization, unification, and delivery of different services in a single infrastructure. 

Here is the main distinctive and differentiating feature of Fintech - it unifies diverse services from various payment areas in one innovation, or platform, for example, cloud capabilities where a customer can refer to a Fintech company and take advantage of SWIFT transactions, transactions without account opening and for example acquiring - and all united cloud platform what enhances the usability and efficiency.  

For example, E-commerce merchants can benefit from various payments unified at a single place due to API that enables the integration of switching complementary services and can streamline their payments transactions with ease and convenience whereas in the case with banks the implementation of different payment types can add an immense workload, time waste and adds cost.  

Banks in contradiction rarely use fintech capabilities because of imperfect and in most cases outdated methods, for example, there are still banks that exchange payments orders utilizing e-mail. Even most technologically advanced banks who recognize the importance of digital ways of doing business and that are integrating fintech technologies into their services do not have the opportunities to deliver diverse types of services at one place because in most cases outdated code base for integration barriers the smooth integration implementation and thus the efficiency and effectiveness of services and transactions is reduced.

Fintech, in its turn, as a superstructure and service provider, enables clients to benefit from the service unification model, for example, the fintech company offers you an API or online platform to partner up with other companies to optimize payment transactions and broaden the distribution network.

However, according to the PwC Global Fintech Survey, it is the bank industry (42%) that are most eager for collaboration and cooperation with Fintechs.  

Another factor why banks fall behind the fintech companies is that their services are restricted by the boundaries of the place where the banks are placed. You as a company or business have the opportunity to use the bank's services only in the frame of your current placement and country location. fIn case your intentions are payment services provided abroad it would be highly unprofitable and in most cases even unimplementable. Fintech on the contrary due to its flexible and service-extensive superstructure provides you with the extensive and various range of services of different banks in its back-office due to technology capabilities such as API, for example. 

Another example of unifying fintech services is Blockchain integrated IoT devices. The payments are implemented on IoT devices where Blockchain as a distributed ledger can store all kinds of information by means of which the trusted real-time transactions without intermediaries are secured thus providing fast transaction processing and coordination among billions of devices. 

Revolutionary and disruptive innovations are always intended to change reality for convenience and mobility. Fintech is a complex and diverse ecosystem, “a thing in itself”. It concentrates different services from various companies and countries in one place through which the consumer be it merchant, business, or just an individual benefits from the unification structure reducing cost and time for services implementation. 




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Orkhan Nasibov

Orkhan Nasibov


Guavapay, Ph.D. in Economics

Member since

14 Dec 2020



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