Fintech Disruption: Breaking News On Game-Changing Technologies In Finance

It is no longer news that virtually all sectors of the world are fast becoming digitalized, and it is no surprise that the financial sector is next in line to experience a massive technological overhaul or shift from the traditional system to a modern system, with swissmoney as a great case study. 

Fintech is making ground-breaking innovations by harnessing new technologies to provide potential benefits to consumers and has made inroads into online payment and lending services. 

Though technologies are not new to the financial sector, with Fintech currently holding a 2% share of global financial services revenues and projected to hit $1.5 trillion annually by 2030, it is evident that Fintech has begun to change and disrupt the world financial services sectors. 

In this article, we will delve into the Fintech ecosystem and expounds on how Fintech disruption is revolutionizing the financial services sector. 

What is Fintech Disruption of the Financial Industry? 

Financial technology disruption is a complete shift in the ways banking services are offered to customers from the traditional banking system to a combination of finance and technology - fintech. 

Beyond providing basic banking services that are common to traditional financial institutions, fintech, or what you can simply refer to as neo-banks, also helps customers invest in digital currencies and create a platform for stock exchange and trading that is unfamiliar to traditional financial institutions. 

Since Fintech heavily banks on technology, they are prone to cyberattacks. This is why most of these new institutions introduced trusted trends like blockchain and deployed cybersecurity innovations to secure customers' funds and information. 

Now that you've understood the Fintech disruption, we must dive into how this ground-breaking shift has recently impacted the financial services sector.

How Does Fintech Disrupt the Financial Sector?

Fintech companies have changed the entire banking system by offering solutions that bring value that their customers need. 

Financial technology has completely changed since introducing Fintech 1.0 in the 19th century. This change has enabled it to be at the forefront of banking disruption. 

Below are some ways Fintech has introduced the digital revolution to the financial sector. 

Fintech Disruption #1: More than enough productive values 

Most Fintech innovations have summed the banking sector's goal to better service value. They offer a basic template for creating values for targeted prospects. For example, mobile payment gateways allow online transactions. 

Therefore, online traders and customers can buy or sell through that medium. Adopting this method helps to increase the value chain of open banking services. 

Other disruptions concerning values are machine learning, AI, robo-advisors, digital banking, and automated teller machines. They all improve the value chain of banking systems. 

Fintech Disruption #2: More Branding 

The phrase "Venmo me" is relatively common. It is simply a branded language that promotes Venmo. Right now, one common thing that most marketing departments do is to create branded language to drive how their products should be used. 

Branded language simply helps to enhance brand familiarity for customer acquisition. And in the most useful ways, it also helps industry entrants as the name may become adopted in the industry as a widely accepted term.

However, Fintech companies are also deploying new innovative systems for branding. A relatable example is gamification, which allows users to use game-like elements in a non-game situation. 

This innovation is designed to help assure users that they will have a fun-filled experience using a particular brought. And if this is rightly used, it can enhance users' retention ability. 

Examples of disruptive Fintech apps that are shaping branding with gamification are Revolut, Cake, ikano Bank, Fortune City, and Monobank. And when it comes to numbers, gamification will increase from a little over $9 billion in 2021 to above $30 billion in 2025. 

Fintech Disruption #3: More Customer-focused Technique

Another way FinTech is disrupting the financial system is by providing an enhanced customer-focused technique. According to a report published by the Economist, most Fintech firms are increasingly adopting more customer-focused in their business structure. Banks now access information using AI and Big Data. 

Let's consider Revolut - a Fintech firm, as a case study. This company focuses on customers' needs at all levels. They grew from 150 thousand customers in 2017 to over eight million customers. According to Ron Olivera, the company planned to expand its product in America in 2022 by getting customers from legacy banks. 

Having highlighted various disruptions that Fintech is achieving in the financial sectors, we must discuss briefly some of the innovations championed by this transformation. 

Innovation #1: Fintech Chatbox

Fintech offers quality customer service via chatbots to its customers. Customer service is one of the primary activities of traditional financial systems, but Fintech companies adopt Chatbots to automate costs and manage customer expectations. 

Apart from that, Chatbots are useful for cross-selling and upselling, retaining customers' retention rate, and enhancing users' engagement. 

Some real-life examples are Eno and Erica – both are used by Capital One and Bank of America, respectively. 

Innovation #2: Payment Gateways

This system allows online buyers and sellers to pay before a service or goods is rendered or delivered. Beyond the payment process for easy purchase, additional innovations, such as delivery address confirmation, AVS checks, velocity pattern examination, and others, are made easy by FinTech companies.

Innovation #3: Alternate Credit Scoring

Normally, a person's creditworthiness is determined by their credit scores provided by agencies like Experian, Equifax, etc. But we can't agree that these metrics are encompassing enough to give us what we need to determine someone's creditworthiness. 

But Fintech companies adopt alternate credit scoring to help determine someone's creditworthiness using varying data. 

Examples of firms that have adopted this innovation are Zest AI, Cortera, Canopy, etc. 

Conclusion

In conclusion, Fintech is increasingly growing in its capacity to replace traditional banking systems with many banking processes that will ease banking stress and improve customer engagement. In the next decade, if the customers' trust in neo-banks begins to grow as it is now, financial technology companies will take over the entire financial systems sector.