Currently, fintech is one of the most emerging industries
all over the world. More and more companies are launched every day using
technologies to provide financial services to people involved in the business
sector. In fact, fintech is all around us nowadays as everything we do online
may be part of the industry without us even realizing it. The reason for this
is that all the newest technological innovations are related to fintech.
Whether you are using payment apps like PayPal to purchase certain products or
managing your finances using other apps, you are taking part in FinTech.
Any company that provides financial services through
software technologies, mobile devices, or the internet is described as a part
of fintech. Some other examples of fintech are crowdfunding platforms such as
Patreon, GoFUndMe, and others that are pretty much different from traditional
banking systems as they allow internet and app users to send and receive money
from other people more easily and instead of going to a traditional bank and
ask for a loan, take advantage of the pool funding from different sources in
just one place. Fintech innovations are also used in trading platforms. For
example, you can visit BrokersOnline website and see that now fintech has
literally opened new horizons to traders because thanks to new technologies now
they can easily make money transfers and manage their trading accounts without
worrying that they have to involve some financial institution in the
process.
Therefore as the number of people who take part in these
kinds of activities rapidly grows, not surprisingly Fintech is thriving. There
are many reasons why it’s so popular nowadays but as some experts predict,
sooner or later there will come a time when fintech innovations start to
naturally slow down and the emerging industry will face recession.
What is the reason for the FinTech market disruption?
One of the major reasons that slow down the success of
fintech is new waves of the coronavirus pandemic. Some financial experts
believe that now the fintech sector is in front of an existential crisis as a
result of the ongoing Covid-19 pandemic.
In the first half of 2020 investments in the sector decreased by about
10% globally and 40% in Europe as a result of the lockdowns in most countries. It’s
obvious that the pace of the funding to fintech companies in the first months
of the current year has decreased, returning to the levels of 2017. And as the
tendency goes on. fintech may become vulnerable to overcome the crisis and
start to slow down.
The virus outbreak caused important declines in spendings and
this is why there is a chance that the Fintech industry may face certain
threats. In order to continue implementing innovations, as well as attract new
customers, the industry has a continuous need for capital. However, this can be
a little bit difficult nowadays as the covid-19 crisis had a serious effect on
the runway for many fintech startups, posing an existential threat to the
sector.
Today more and more financial experts state that currently
the industry may be thriving but the recession is predictable because it’s
natural for all the industries in the world to come up with crisis at certain
times and as there are several factors like the pandemic that slows down
developing new ideas and making innovations, it’s highly likely that the
tendency of the increase will finally come to its peak shortly and after that
the fintech will naturally start to disrupt. Specifically, as estimated, about
$5.7 billion will be needed to maintain the success of the EU fintech sector
throughout the second half of 2021. But nobody knows where these funds will
come from, as businesses involved in fintech are not eligible to access loan
bailout schemes because of their pre-profit status.
How can fintech companies survive?
However, there are still many chances for fintech companies
to overcome existing barriers and survive. For this FinTech businesses have to
navigate all the changes and set the goal according to their priorities.
Companies need to take a greater look at current trends in this fast-growing
industry to stay one step ahead of their competitors. And for this, the first
thing they should do is an open architecture.
If you wonder what opening architecture means, we will tell
you that the companies need to prepare their product with the application
programming interface (API). This is a technology that refers to multiple apps
that interact and function at the same time, obtaining data from one another.
This way products will obtain more users because it’s pretty convenient when
products work equally well on different platforms like mobile and web. The key
takeover from this tip is to balance your cybersecurity and manage the product
by adjusting it to the needs of the market and current trends.
One more important thing that you need to pay attention to
is access to skilled employees. It may be a trivial idea that every company
needs motivated and skilled employees to grow but this is vital for surviving
and competing with other brands as today there is a bigger competition among
employers. For this reason, Fintech companies should invent new recruitment
methods to gain better employees and create educational opportunities for them
which is essential for navigating through current trends and adjusting to new developments.
Finally, we can say that today fintech is one of the most
thriving industries with lots of benefits, but it doesn’t mean that the
tendency won’t change anytime soon if the companies don’t start paying
attention to important details. As the pandemic goes on, surviving for the
fintech startups becomes harder and that’s why everybody should consider taking
precautions and keeping tips from the experts in mind
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