Financial technology, or fintech, is changing the ways we bank and interact with our financial institutions, says a report from PwC.
Fintech, broadly speaking, is the use of technologies to solve customer problems or offer solutions in financial services. Online banking is an early example. As new fintech offerings become available, they change the way we carry out transactions and communicate with our banks.
Reshaping financial services
PwC conducted a major study of fintech to examine how it is reshaping the financial services sector.
Ronan Fitzpatrick, a director with PwC Advisory, explained that fintech is responsive to customer needs.
“It’s about using emerging technology to answer the needs of customers and solve problems for financial services companies,” he said.
Challenges to financial institutions
Banks and traditional financial institutions must to respond to emerging technologies. This means they need to keep on top of new developments, as well as update their legacy systems as regulations and technology change.
“The challenge is how to keep your customer base and be relevant to customers while others can deliver a better solution quicker. The smaller niche players can be more nimble,” said Fitzpatrick.
Many new fintech companies start as mobile and cloud-based services. As a result, they have data and analytics built in. Traditional financial institutions however, often need to play catch up in these areas, said Mr Fitzpatrick.
Furthermore, there is the legal issue of regulation. Fintech apps are regulated in the country where they are established.
“Regulation is one of the primary reasons why the large players will never be as quick as the smaller ones. By virtue of being in operation for longer, they will have more applications to remediate when it comes to regulation,” Mr Fitzpatrick concluded.
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