Will every business become a part of the fintech sector someday? A variation of this question appears as the title of many articles on the Internet. Hardly surprising, really - the provision of some form of modern digital financial services is not just for showing off the company’s innovativeness. These types of implementations provide unique advantages for both companies supplying such solutions as well as their clients. Many players in the IT market today want to actively take part in the fintech revolution and present new ideas for their services. However, should everyone fight for their piece of the pie in the financial technology industry?
Innovation in the fintech industry is a constantly trending topic with really impressive capital behind it - last year's investment value in this area amounted to almost 132 billion USD. That is more than twice as much as the year before. Where does this interest come from?
What is fintech?
The very concept of fintech originated in traditional banking. It simply meant the technological base of financial institutions, not necessarily even digital - even the first ATMs could fall under this definition. After the global financial crisis of 2008 changed the perception of conventional banking with the simultaneous increase of access to mobile technologies, the term has taken on a much broader meaning.
Modern financial services based on digital assets began to be called fintechs - textbook examples include not only online banking in general (including mobile banking), but also online currency exchange services, multi-currency card ecosystems, or companies dealing with financial and information security. An app that facilitates paying bills and helps with efficient home budget management (the many award-winning Scandinavian PAYR), as well as loan comparison sites (Polish BANCOVO, powered by Alior Bank) are other examples that also fit the definition of fintech.
Fintech companies – a threat to banks?
The list of examples that show innovation in the field of any financial-related services may go on for a while. The number of various sites and apps related to the topic shows that at some point traditional banking services ceased to be enough. Why, however, almost only the fintech industry has satisfied the demand for modern and more accessible financial products for so long? Have traditional banking institutions somehow missed the opportunity to expand their portfolio with more innovative and thus competitive products?
Changing the way financial services are provided is a challenge. Banks were introducing new products quite slowly, despite the clear demand. The existing solutions had to become more universal and tailored to the needs of customers. Traditional banking, however, relies on old, inflexible systems – this is still the case in many countries. Maintaining these systems has often consumed or still consumes most of the budgets of banking IT departments. This durability and immutability was essentially a guarantee of the stability of the institution for a long time - it inspired trust. Any changes could be costly, each oversight was associated with a high risk, and the need to train employees in the newly implemented solutions was an additional problem.
The future of banking
Currently, though, it is the banks that invest both financially and technologically in fintech solutions. Moreover, many start-ups in this industry are supported by larger institutions to check how a given product will perform in the market - if successful, the bank will buy out such a company. This allows to take over both the very idea for the service and the fully operational business, already generating profits and with an established customer base.
Thus, there is a symbiosis - many companies from the fintech industry operate thanks to financing from the banking sector. In turn, banks and their products develop through the integration of solutions invented by fintechs and mutual competition. The technological changes taking place in banking are to a large extent the result of the fintech sector’s growth – including banking as a service, i.e. the provision of modular packages of ready-made process solutions. A potential investor, start-up, or bank can select the appropriate set of functions and put in place a system tailored to its requirements, business processes, or to implement a new service. BaaS - Banking as a Service - fosters innovation.
Fintech apps – how to (properly) do it?
The fintech solutions of individual companies serve not only the convenience of their clients. These types of innovations also enable the creation of new ways to keep the customer as well as increase his commitment and attachment to the brand. In this context, not only the type of financial service itself is important, but also the way the client uses it. A well-thought-out Product Design defines how a user moves in the ecosystem in the given application.
Appropriately designed and optimized user path is what we pay special attention to at Speednet in each and every project. It makes the later observation and analysis of the person’s behavior more effective. Thanks to the data obtained this way (e.g. knowledge about what actions are performed most often or what part of the solution is less popular), creating highly personalized offers becomes easier than ever.
Proper implementation and use of financial services improve the quality of customer care, help to enter new markets and introduce new products and services. It is all possible without changing the entire identity of the company or the painstaking learning experience of entering a fresh industry. All this with mobile-friendliness, efficiency, and simplicity of fintech products.
More and more companies decide to introduce their financial infrastructure. This is an extra but at the same time crucial reason why the user decides to stay with the brand for longer. Since he already uses a given solution in various situations and has gotten used to it, he does not want to switch to other. Google, Amazon, and Apple release their very own payment cards and allow clients to use virtual wallets. Lidl and Żabka (a chain of convenience stores in Poland) let customers pay for groceries via their dedicated mobile apps - Lidl Pay and Żappka Pay, respectively. Both of these solutions improve the purchasing process at the checkout, allow to collect loyalty points and to take advantage of promotions and discounts prepared for users. On the other hand, Allegro introduced its BNPL (Buy Now Pay Later) service - Allegro Pay, which allows paying for purchases later, without any banking procedures.
How to succeed (not only) in fintech? Experience.
The biggest challenge for financial services companies (fintechs, banks, etc.) is to reassure users that their money is safe. At Speednet, cooperation on each of our projects, not only fintech ones, is based on trust - the client’s in us, our in specialists, and the team’s in each other.
Through years of experience with Polish and international clients, we have built a reputation as a reliable partner in projects for the financial sector. During this time, we have developed and created many innovative solutions, from service for international money transfers to entire multi-platform banking systems. Various models of cooperation – from working with dedicated teams to designing and bringing the entire projects to life from scratch – allowed us to gain flexibility, extensive expertise and to learn about industry trends.
At Speednet, we create software for fintechs, constantly observing the market to be able to predict its future. Financial services need modern technologies to retain customers and to meet their growing requirements. The introduction of new, innovative solutions is therefore an essential element of long-term development strategies for companies that want to get into the finance area. Not all of them will go for it for various reasons. Either because they feel reluctant to take that much responsibility, or they see no reason to expand their business in this way. Consumer behavior is changing, though - more forcible than ever before.