The financial and banking sector has already undergone
overwhelming changes in the last 10 years.
Online banking and the digitization of banking operations
have already transformed financial services.
As usual, tech giants are leading the pack. In 2019 Apple
has launched a new product, which comes as no surprise, given that the brand is
famous for innovations. This time, it was not a new gadget. It was a credit
Apple is no exception, though. Companies in both B2C and B2B
sectors are adding banking and finance to their palette of services, allowing
users to leverage such features as P2P lending, payment processing, etc.
Companies like Uber, for example, are now generating revenue not only through
margining on rides but also via providing banking services to drivers, who are
more likely to stay loyal to a company that fulfills the need for secure and
The trend is the same in the B2B sphere, as it turns out,
almost 50% of Shopify revenue comes from providing financial services, apart
from helping merchants build online web stores.
So What Is the Driving Force behind These Changes?
The ongoing digital transformation offers companies room for
experimentation. In 2022, entering the software development market is way
easier than it was 10 years back before the advent of cloud services completely
reshaped the ways IT infrastructures are deployed. Instead of investing in
physical services and costly software licenses, businesses can now rent a
secure cloud environment for a reasonable fee and use a Software-as-a-Service
(SaaS) model for gaining access to development tools. This allows them to
quickly launch and test innovative products and venture into fields they
previously did not dare to even consider.
In banking, the situation is very similar. In the past,
getting into a banking business used to be quite difficult. Ensuring licensing,
regulatory compliance, effective processing of payments, data analytics and
fraud prevention involved forging partnerships with at least 12 companies, and
took immense effort and about 2 years of building partner relationships. At
present, the trend lies towards the emergence of companies that help businesses
build licensing, compliance and fraud-prevention infrastructures for effective
banking on as-a-service basis. Companies like Plaid, Synapse and Comply
Advantage are currently helping businesses to start delivering financial
services faster and more effectively.
Another factor that facilitates fintech adoption for companies
is the rise of Open Banking, a technology that uses open APIs to help
developers build financial services. Born in 2016, Open Banking addresses the
need of both newly emerged and incumbent financial companies to give access to
their transaction data, compare accounts and create new services by enabling
them to turn to regulated providers
Ultimately, all financial market participants will benefit
from the transformations in fintech. Entrepreneurs can leverage opportunities
to build fintech infrastructures for banking and accelerate the launch of
fintech products. Established financial firms will be able to modernize their
legacy systems and develop new solutions, and every company out there will have
all it takes to serve, retain and attract customers through offering them
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