We are in the throes of a fintech revolution – or so we have been told since the turn of the century. In truth, the transition towards financial services being delivered digitally is only now starting to take shape in a meaningful sense.
The past 10 years have seen a steady, conservative development and adoption of financial technology. However, the coronavirus pandemic will act as a catalyst for the fintech movement.
There is a huge amount at stake. On the one hand, consumers and businesses are forced to manage their finances remotely via online and mobile platforms. On the other hand, finance companies are quickly having to understand how they can deliver an exceptional service at a time when offices and branches are closed.
In the world of financial services, both customer and provider are having to adapt to the “new normal”; that is, the replacement of a physical world with a digital one. For many businesses, this change poses significant challenges.
Interoperability is essential
The fintech revolution is about much more than people being able to use apps or online platforms in place of face-to-face meetings, phone calls and exchanges of letters. It promises open access to data, hassle-free banking experiences and fairer deals for customers.
Yet only relatively small steps have been taken towards this vision. Until now we have only really witnessed a cautious adoption of technology as consumers, regulators and established banks became familiar with what it can enable – and this has still come at considerable investment.
One of the main issues is that fintechs – the startups that are developing these new technologies – are focused on solving very specific, niche, single problems: identity verification, alternative credit scoring, AI assisted chatbots and recommendation algorithms, next generation core banking, transaction classification, and simplification of mortgage chains.
However, businesses and consumers require more than individual technologies solving individual problems. Entire systems and platforms are required if the vision of the fintech revolution is to become a reality. And to that end, interoperability and connectedness is essential.
The finance and banking firms that are best able to deliver an exceptional service to customers in the midst of COVID-19 pandemic are those that have formed partnerships to create technology that can be used seamlessly between separate banking products and accounts.
During this period of economic uncertainty, there is a greater demand for financial advice, products and credit than ever before. Companies must be able to deliver this with speed and simplicity – indeed, there are examples of credit marketplaces in the UK that already offer pre-approved loans that can be opened in just a few minutes with minimal clicks; this is all thanks to progressive technology choices from the lenders.
Embracing cloud-based fintech
In order to operate effectively in the new digital landscape, financial services companies will need to move to take advantage of cloud native technologies, if they have not already done so.
Moving to cloud technologies will allow for manual steps to be removed from the complex applications, onboarding and completion processes that almost everyone has experienced when opening a bank account, taking out a credit card or getting a loan of some description.
Companies that focus on utilising best in class providers in their value chain in order to build a truly exceptional service offering have a better chance of succeeding. Conversely, fintechs focussed on solving singular issues in isolation, while useful, will not deliver the “revolution” that has been much-hyped over recent years; this can only be achieved through partnerships between such companies or when larger financial services firms start to adopt these technologies.
The sudden and stark arrival of a “new normal” has placed large sections of the financial services industry under strain; fintech is no longer a consideration but an essential, and those firms that are best able to adapt to this reality will be well placed to weather the storm.
By Ammar Akhtar, co-founder and CEO of Yobota, a London-based technology company.Yobota has built a fast, flexible, cloud-native core banking platform, which allows clients to create and run innovative financial products.