Essay Example on There are certain predictions about Fintech









Detailed future can be unknown however there are certain predictions about Fintech and main financial sectors According to PwC Global FinTech Report 2017 personal loans and personal financial most likely to shift towards FinTech companies On another hand it is a great opportunity for banks to expand their services and improve delivery channels Most of the banks formed two groups 54 of banks are ready to be partners with FinTech and 40 of banks are considering buying FinTech companies Most probably the banking sector will continue to explore new technologies Moreover they will evaluate potential growth with FinTech companies and focus on transforming existing strategy The second industry which will be influenced by FinTech is Insurance sector According to PwC survey around 58 of insurance companies are observing FinTech companies in order to be competitive enough However a great number of companies are planning to collaborate with FinTech firms consequently the number of partnerships will increase by 84 over five years The most influenced sector will be transactional and payment services 

Those companies are already investing in FinTech companies and adopting existing technology such as data analysis mobile and cybersecurity Additionally payment companies are investing in blockchain technology and planning to accept it by 2020 The detailed future of FinTech companies stays unknown but according to The Bank of New Year Mellon Corporation 2015 there are three core factors that have an impact on change The world is facing rapid growth due to innovations market conditions and market trends These factors determine how FinTech will be in the future It is obvious that technology is at the center of big changes in the banking industry and the finance industry Day by day innovations getting adopted at the rapid rate in particular aspects similar to data management and security are moving towards Information Technology IT Puschmann 2017 For example storing data on clouds are a cost saving solution which is effective and efficient enough to gain popularity in short period of time Moreover traditional banks are showing a high level of adoption by accepting online payment providers PayPal Amazon Payments Some issues that banks face can be solved by utilisation of new technology For instance the innovative software can store and interpret a huge volume of data at the same time it required proper protection which can be done with biometric security facial voice recognition In the future banks can track consumers spending history in order to determine credibility of the clients Another great example of securing information and avoiding potential fraud is the employment of GPS Banks can check customer’s location via mobile application and investigate the validity of transactions Some changes originate from current market trends The world became fully globalised and adoption of new machines is rapid and widespread BNY Mellon 2015 Starting from 1900 to 2011 the adoption rate is increasing its speed year by year see fig 4 

Moreover increasing population has a significant role in the market According to Chaia Goland and Schiff 2010 approximately 2 2 billion adults are considered as financial unserved in Asia Africa Latin America and the Middle East These individuals require financial services that can be provided by banks The existence of technology and continuous growth of population creates a bigger customer range Like market changes industry s orientation might influence financial sector For example the global world crisis effects on certain rules and regulations imposed by the central bank Consequently businesses can become transparent which is one of the main advantages of banks Additionally it influences liquidity and risk management Individuals believe banks and let them hold their money consequently the main strength of the financial industry is trust However the last years necessarily new concept came out in which a lot of complicated processes can be done by the Internet Combination of these platform businesses and a new generation with higher adoption created phenomenon where people trust machines to make important decisions It is essential to mention that mistakes done by machines are infrequent and stay within the range of reasonable acceptance According to Dhar and Stein 2017 complete Internet platforms have three fundamental elements Open Access There is open and easy access for participation Technology Business process is implemented automatically by utilizing technology Business Processes Implementation of key business and operational processes Alstyne et al 2016 Figure 5 presents three main components that are required to create a proper platform for FinTech companies Dhar and Stein 2017

The existence of those elements gives an opportunity for Peer to peer P2P lending electronic exchanges and robo advisors The electronic exchange was in the market for a certain period a great example is Royale Exchange of London which allows to trade assets like equity bonds and foreign exchange without brokers On another hand P2P lending and robo advisors are new features of FinTech platform Robo advisors are available for retail investor and provide the majority of services that were offered by humans According to Fein 2015 robo advisers can assist investors by decreasing costs and minimizing interest conflicts Nevertheless some believe that recommendations of robo advisors are based on incorrect presumptions defected information or any other circumstances that are not relevant However it is important to mention that most of the businesses are considered as an incomplete platform consequently they are several strategies regarding the transitioning Dhar and Stei 2017 First of all the prime solution is adding mission element For example the diagram see fig 5 display different way for a business to move towards the complete platform Another strategy solution is replacing a component The new replacement should be cheaper safer and faster along with having similar functions Taking everything into consideration one may conclude if there is the proper platform for FinTech companies consumers will trust FinTech firms As a result it will create a huge competition between FinTech companies and traditional financial institutions

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