THOUGHT LEADER: STEVEN PAUL How are fintech firms embracing leadership to evolve & grow? Business leaders have long regarded fintech as a digital force that could bring about unprecedented change to any industry. With an estimated worldwide worth of $4.7 trillion, according to Goldman Sachs, the wave of fintech startups are changing the future of finance – for the better. The newfound interest in Fintech is well-founded, especially after considering the crash of 2007-08, which is where policymakers first thought of concentrating on making finance safer for businesses. According to research by Capgemini, fintech startups and SMEs, driven by a younger and more tech-savvy customer base, are gaining momentum. This comes as no surprise, as fintech firms specializing in online payments have facilitated the expansion of capital access for startups and SMEs, including women entrepreneurs, who, up until then, found fundraising close to impossible. Fintech startups have helped level the playing field, which has resulted in neither the customer nor the service provider being underserved. This has helped fintech companies establish a positive rapport with the current startup scene, along with many established businesses. Billing and payment tech companies span from facilitating payment processing to offering solutions such as payment card developers and subscription billing software. The one thing that both startups and established firms have in common is the need for faster, more secure payment methods. The good news is that fintech firms specialize in a combination of Robotic Process Automation (RPA) and AI (Artificial Intelligence), which is being called “Intelligent Automation.” This is the next step in the evolution of the way that businesses can get more work done effortlessly. This is also a reason why the need for Intelligent Automation has quickly garnered the interest of the financial sector, which sees its potential. According to a study by Capgemini’s Digital Transformation Institute, by the end of 2020, the financial services industry will generate an estimated $512 billion in new revenue globally by using the process of Intelligent Automation. Other technologies that are helping bolster the growth of fintech firms are Blockchain technology and Machine Learning (ML), both of which have moved from the outer fringes to the centre of the new technology boom in the fintech ecosystem. Offering Value in Payments Back in the day, transactions between merchants took place using gold, silver, and other physical commodities. That practice ended in 1971 when the US dollar and the other world fiat systems separated from the gold standard, embracing the concept of floating exchange rates. Over the coming years, financial institutions have built payment systems that seem to be obsolescing in front of fintech disruptions.
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These include: decentralized protocols, disrupted ledgers, and, of course, virtual currencies. This is partly because fintech firms, especially those that operate within the payments niche, are more in tune with the growing needs of a demanding customer base, including the high-expectations of tech-savvy entrepreneurs who buy and sell goods all across the globe in a matter of minutes via their phones. Customer Centricity: The Need of the Hour There’s an increasingly growing trend of creating an ecosystem of interconnected services, which is beneficial not just for the customers but for the service providers as well. By providing an integrated customer experience, organizations can create an ecosystem where they not only offer their services but also facilitate other services as well, creating an interconnected marketplace where customers have quicker access to the service providers they need and vice versa. For instance, Customers can use a platform to find the service they need. This, in turn, generates data. That data is then used by partner companies to sell services via said platforms. This has led to entrepreneurs getting access to efficient transaction methods, which has resulted in using innovative solutions to transfer value with efficacy, all the while effectively bypassing the traditional red tape that startups and SMEs have traditionally come across. Some great examples of how fintech is improving payments across the board are crowdfunding platforms, Blockchain, mobile payments, insurance, stock-trading apps, and budgeting apps. All of these are now powered by fintech’s newest technologies. Standardization, Disruption, and Regulations There are three distinct categories of fintech-related policy measures taken by governments: • Those involved in the direct regulation of fintech activities. • Those focused on using new technologies to offer financial services. • Those promoting digital financial services (aka payments solutions). The first type of policy measures takes into account specific activities. For instance, peer-to-peer lending or digital banking, and payment services, while the other regulations have to do with market participants who are using fintech technologies, for example, cloud computing or AI. The third type of regulation considers enabling regulatory initiatives relating to digital identities and data sharing, along with establishing sandboxes, accelerators, or innovation hubs that encourage growth.
