“Fintech” was one of the hottest buzzwords of 2016 – but its exact meaning and impact on our economy may not be clear. We don’t have the exhaustive definition today, but here are answer to three common “whats” of Fintech.
What is Fintech?
Fintech, short for financial technology, describes the way technology interacts with financial services. Companies with this moniker can range from disruptive startups to legacy providers. As PWC puts it, think about the ABCs of Fintech players:
- A: Large, well-established financial institutions (Bank of America, Chase, etc.)
- B: Big tech companies in the financial services space (Google, Apple, Facebook, Twitter)
- C: Companies with infrastructure or technology that make financial services transactions happen (MasterCard, First Data)
- D: Fast-moving disruptors (startups)
As customers demand faster, frictionless transaction experiences, established financial institutions will increasingly tap disruptors to create new ways to deposit money, pay bills or lend.
What’s next for Fintech?
Until now, Fintech solutions focused almost exclusively on a B2C environment. How fast can a secure transaction happen? How do financial service companies keep up in an increasingly on-demand world?
As the industry grows, huge opportunities are available in the B2B space. Specifically, you can expect to hear more about blockchain transactions used to drive down costs. While some companies – like Walmart – are already exploring this space, more will discover its benefits.
What should companies do to prepare?
The Fintech revolution isn’t going away. To make sure your company is ready, embrace agility. Change is difficult for large institutions, so start thinking about how your company can better incorporate new technologies.
One of the best ways to do this is to change the way your company addresses innovation. Learn how disruptors find new ideas and implement them. Once your company is more comfortable with a fast-paced environment where it’s okay to fail fast, you’ll be surprised just how much you can innovate.
How are you seeing Fintech impacting your industry? Share your insights with me at HTaphorn@REDICincinnati.com.