FinTech Revolution and Our Banking Industry

          FinTech Revolution and Our Banking Industry

FinTech is transforming the banking industry and openhanding millions of people to access to financial amenities for the first time, new banking models are evolving with FinTech startups. Technology companies are becoming the face of the banks and the traditional bankers are getting limited till back end utility providers. In this article we will discuss how the FinTech is revolutionizing our banking industry, what will be the future banking models and our business schools and universities are preparing future bankers for these changes.

Henri Arslanian FinTech thought leader says that “we are going to one of the biggest transformation in financial history the FinTech revolution and it is going to transform banking. This revolution have significant impact on financial industry, it is reshaping the industry and the future bankers will be very different from the bankers of today. They will have different personalities, educational background and different skill sets”. 

“Fintech” stands for financial technology, is the innovative use of technology in the design in delivery of financial services and its transforming the banking mode, things from artificial intelligence, peer to peer lending, big data, block chain, crowdfunding, digital payments, and robot advisers are name of it.

Why it’s happening now? Historically as technology involved the banking industry was reasonably good and integrated these new technologies in order to better serve customers. But all of that change during the financial crises of 2008, banks were busy in dealing with a disaster situation, frequent new rules, regulatory requirements, and fines impose on them. But innovation became very distinguish importance, at the same time some of the most game changing technological innovations, they have transformed the way we live. They have become part of our everyday life just think about iPhone, Uber WhatsApp for example. The gap created at that time what your banks were offering you and you as customers expecting from your banks especially from user experience and convenience perspective.  And that gap is what the FinTech industry is tackling with that now.

That gap was so big that even nontraditional banking players decided to jump in and capturing this opportunity mainly technology firms. Such as Facebook have taken 50 different regulatory license as Facebook Payments Inc., these licenses that would allow Facebook users to transfer money via the messenger app in different states of USA. Amazon offering student loans and other financial services from its platform, Ali Baba’s financial arm and financial launch a money market fund they have become the third biggest money market fund in the world. That fund have more than 150M investors, who have an average investor less than a thousand dollar each, many of them have their first investment ever. Tencent QQ Messaging app has become most of the common source to transfer money. It not only allows you to buy insurance products or invest in funds directly from your smart phone but also but also book your next doctor appointment, order a taxi, donate to charity, and even find a date where ever you live.

The financial platforms of the future are not be a traditional banks but a technology firms. My one year son can probably open a bank account not with slandered charted, ABL, HBL or UBL but rather with Facebook or Apple. These technology firms have daily existence touch points with customers, and to certain extent they have customers trust and confidence. If you are comfortable enough to share your family Photos on Facebook or WhatsApp, will also use them to transfer money to your friends and family.

If you buy all your daily necessities on amazon, Alibaba or Draz.pk will also buy insurance products using their platforms. There now thousands of new and dynamics FinTech startups, they are offering products, which used to be offering previously by traditional banks, peer to peer lending platform now offers consumers and alternative to loans that used to be previously available mainly at banks. Robot advisory platforms offer consumers asset management solutions that are not only more transparent and what they charging but also substantially cheaper.

It’s very unlikely that you see the FinTech startup one thing that become deposit taking institution the wallet where the assets are held, they are very happy to control the front end the consumer facing part, and leave the boring backend that’s traditional bank things like reconciliation, regular reporting etc. In this may have created the new banking model of the future where traditional banks are handling the backend basically becoming utility providers to the technology firms and FinTech startups who control the front end and customer experience. But this FinTech revolution is also bring a lot of other positive developments one of the most important is financial inclusion. Currently in the world we have more than two billion people who are completely unbanked these are individuals who have no access to bank accounts, no way to borrow money for, they have only a way to save their money in their pillows or hiding down in their mattress. And in the first time in the history of modern age we are able to offer these individuals for financial services. This is the positive difference that according to the World Bank from last five years seven hundred million people went from being unbanked to being banked. And this is the beginning FinTech industry is continuously working on transforming our financial services are being delivered and consumers will be the biggest beneficiaries.

The banking landscape is changing and in order to survive banks need to evolve and adopt FinTech in the design and in delivery of financial services. Future bankers will also not the traditional bankers rather will be the designers, programmers and the creative thinkers. They could be financial designers, financial programmers, Fintech Developers and creative thinkers. But the point of concerns is that our business schools and universities are not developing future bankers’ rather traditional bankers which will be eliminated to 20% to 30% part of the future banking. We should have to plan accordingly if we want to survive in future banking and economic business model. Our universities should start offering courses on FinTech, financial designing, financial programming's to compete the world in future.   

By: Mazhar Mahmood Jatoi