• Oliver Tams

Problems Fintechs can solve.



Fintech, or Financial Technology has captured the hearts and minds of investors and the financial sector, looking for solutions that have long been too complex for legacy systems, especially those in banking. Waiting in line for a bank teller, paying with cash, writing cheques, lost invoices, shoe boxes full of receipts and holding on the phone are all challenges that Fintech has addressed. E wallets, heightened online security, early settlement discounts and flexible payment options have also become the catch cry of the Fintech industry as it seeks to connect with absolutely everyone online. The complexity of the bank operation, the organisational structures and the legacy systems and thinking leaves the banks with no alternative but to work with the more agile and adept Fintech sector for survival and growth. PwC has indicated that 75% of financial executives think Fintech will disrupt the banking industry causing 80% of banks to believe they could lose up to 20% of their customers to the Fintech landscape in the next 5 years.

So what are the banks to do? Partnering, merging and acquiring are all strategies that bank boards have signed off on. The recent bank acquisitions of Fintechs such as 86400 bank and the partnering of Fintechs for innovation and accelerating revenues will only speed up as financial institutions look for future advantages. The ability of Fintechs to solve both vendor and buyer challenges provides banks the opportunity to expand their customer base, increase revenues via lower cost bases, reduce delivery risks, provide faster speed to market and remain competitive.

The most important innovations are centred around flexible payments, integration of biometric security, reaching the great unbanked, automation of invoices with early settlement discounts and rebuilding customer trust. The utilisation of e-wallets provide flexible payment options for both the buyer and the vendor and the automation of those wallets provides early settlement capabilities as well as better control of cash flows, something the banks have never been known for. With almost one quarter of the world’s population not having access to banking facilities mobile solutions not linked to banks but integrated into them can broaden access to financial services, afford options for savings and loans and not have a wait for a bank teller. All of which greatly increases a bank’s customer base. Add to this the security of the Fintech platforms and the banks have another opportunity to re-establish trust for their new customer base.

As disruptive as Fintechs are seen, the ability to partner and merge with larger financial institutions gives them even better opportunities for expansion and growth. Thus continuing the evolution of Fintechs into the next decade.