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September 15, 2008 – everyone woke up that morning believing it will be a normal day, but they couldn’t be more wrong. Why, you might ask? Because on this specific day, a distinguished investment bank, Lehman Brothers, filed for bankruptcy, the biggest in US history to date.
It was difficult for so many people at the beginning of the financial crisis, and it was also difficult to predict what its consequences would be. People lost their homes and jobs and hence began to question traditional banking. It was a collapse of one era, and the rise of another! This, ladies and gentlemen, is thought to have led to the world’s largest financial crisis, which in return lead to a complete transformation of the banking industry – so-called Fintech.
What is Fintech?
The term Fintech is short for financial technology. It is mainly about recreating traditional financial products and services, but instead of physical offices, these financial services are offered in digital form. Digital banking is now competing with traditional banking primarily because of how it’s improving the use of financial services and its delivery to customers.
With the rapid innovation in technology related to blockchain, artificial intelligence, robotic process automation, data science, and big data, fintech has paved the way for tremendous growth in the financial sector, thus bringing the global market share to USD 7301 billion.
Changed customer behavior
For many years, banks have had very little or no competition at all. But after the rise of Fintech, that has slowly started to change. In the digital era, research is easier than ever. With one search on Google, you can find hundreds of explanations, options and product reviews. Before the emergence of fintech, customers would just have to choose a bank and accept the range of services available to them. Today, fintech has made it possible to construct a service that creates added value without being associated with a specific bank. In this way, fintech is challenging the traditional banking sector.
The digital era
Most traditional banks have had low investments in their technology and service development, which has therefore played a major role in the success of fintech. Traditionally, banks have focused more on preventing future losses and crises, instead of how to make a customer’s life more convenient. This indicated a clear gap in the market and allowed fintech companies to penetrate the market by investing in smart digital solutions that improve the flow of a customer’s banking journey. Companies started to focus on developing new services tailored to the individual user and how they manage their own money. This put fintech players at the forefront of innovative solutions, and they are now significant competitors in the financial market.
It has now been more than ten years since the emergence of fintech, and customers have started to get used to the idea that they have more choice; they can now manage their personal finances without being limited to traditional financial service providers. There are many options in the market that help customers meet their needs and achieve their financial goals easier and faster. With rising innovations across the other sectors such as Ed-Tech and Health-Tech, there has been rapid collaboration with fintech to bring a complete 360-degree ecosystem for customers and ensure that the services delivered to customer are far better and faster.
