Is Fintech the answer to disruption?

As the world enters the era of tech revolution, Fintech products such as P2P lending, digital wallets, online payments and more is becoming highly sought after, Fintech startups should be prepared for the growing demand and understand the financial industry, as AI is creating new opportunities. Despite the fact, that tiny 0.06-micron virus completely changed our plans and its harder to navigate in uncertainties, we can’t deny the fact that Fintech industry has the most promising possibilities now.

Considering the financial capacity of the world, around 2 billion adults remain unbanked globally. This grants a huge chance for digital disruptors to leverage technology and provide appropriate financial solutions in order to link that gap. Particularly now, when governments have announced stimulus measures which include providing cash payouts to help the most vulnerable in society as quickly as possible. Apparently, the infrastructure was not adequately prepared to disburse the aid and many vulnerable actors have been dismissed.

The helicopter view over the situation shows us that regulating innovative players on the ground are necessary to provide payment options to lower income and unbanked segment all around the world.  In the era where cashless transactions are highly encouraged the first shift that Fintech will be facing is to become an intermediary between low-income people and government.

In Financial industry, we see many of the young financial entrepreneurs creating and innovating, whilst the old financial companies are stagnating and waiting for the environment itself to stabilize. Regrettably, nothing is going to stabilize itself, the technological revolution is unavoidable and knocking on our doors. Those who opens and use that opportunity, will be blossoming in this crisis whilst others continue crumbling.

Newbie Fintech players must be relived from the chains of the Regulatory requirements and switched to best practice market guidelines scope. Smaller Fintech companies are failing exactly at the stage of regulatory compliance, while the big financial institutions are having whole teams to deal with those laws. Due to the reason that regulatory bodies are failing to keep pace with changes in technology, that results in leaving many start-ups operating in grey area. Authorities should give startups possibility to fly up in the sky and regulate them only after the startups has successfully launched their products and reached their targets. Otherwise innovations will continue to emerge around restrictions.

Health related restrictions affected on traditional Financial industry, integrating technologies in risk management is becoming inevitable. The challenge is to cut down physical touch with customer, not requesting from them paperwork and signatures, making all traditional identification and assessment process in virtual environment.  This trend is pushing the industry to present Neo products, that are built on real time data, comprehensive customer profiles erected from Artificial intelligence and on predictive tools.

In the light of developing Fintech products, especially on Asian markets, financial regulators started deregulating and taking a supporter role to build a Fintech start-up ecosystem.

During the crisis, lots of financial companies have been creating and innovating, whilst the others just reacting. There are hundreds of examples of how Fintech industry quickly adapted on emerged trends, cause this industry was born in agile environment.

Now there is no time for adapting traditional offline financial products, services and business models for digital channels. Actually, now the time has come for digitally instinctive setups and development through the prism of full-cycle platforms and ecosystems. In the era of the Online platforms and smartphones it’s becoming a meeting point where all customer expectations are met.

 If we take a simple fact that from 2.7 billion smartphone users, they download around 60-90 application, out of which average consumer is using only 8-9 mobile applications daily and checking mobile every 12 minutes, then we are turning into conclusion that consumers are seeking for unified solutions. In Asia for Instance, Apps that provide everyday financial and domestic needs has been flourishing for past couple of years. Of course, the easy onboarding, payment gateways and credit rating of self-employed people is becoming inevitable if we want them to access full scale financial resources and provide with multi functioning solutions.

That implies that the next stage for Fintech industry is becoming compacting the multiple applications and providing accessible solution for financially inclusive segments.

Fintech adoption is accelerated and its vivid how that industry has risen steeply among consumers and small businesses. There are true factors, that will keep the Fintech market on the cutting edge: a new openness to innovation by regulators; the advent of virtual banks; the growth of the API ecosystem; and, finally, the entrance of new competitors backed by financial and technology giants. Advanced FinTech systems are rapidly becoming part of everyday life. FinTech services are integrated with ecommerce and social media platforms, using simplified communication language and becoming a part of our lives. As the Fintech powered services are skyrocketing among the world, the need of new regulatory and technical infrastructure is unavoidable to continue disrupting financial services.

The main challenge we will be facing is to focus on the potential benefits that pandemic brought for us. There is no doubt that it is going to affect every aspect of our lives moving forward, but sometimes we need to step backward to jump further and perhaps crisis is going to act as the catalyst to accelerate financial inclusion in a way that it has never been accelerated before.


Author: Keti Meparishvili | Regional Manager, Asia at TWINO