How to Thrive in the Fintech Revolution

What is fintech?Fintech (financial technology) generally refers to emerging ventures applying technology to

solve a problem in the financial industry.

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Examples Include:

Fintechs are innovating and changing the way we lend and borrow money, pay for goods and services, and transfer funds between accounts and overseas.

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17.6% 16.7%

7.7% 5.6%

MONEY TRANSFER / PAYMENTS

SAVINGS/INVESTMENT

INSURANCE BORROWING

• Use of non banks to transfer money • Online foreign exchange • Overseas remittances

• Online stockbroking/spreadbetting • Online budgeting/planning • Online investments • Equity & rewards crowdfunding • P2P

• Car insurance using telematics • Healthcare premium aggregators

• Borrowing via P2P websites

Most Used Fintech Services

Growth doesn’t show signs of slowing. Investment in fintech is projected to

remain strong… and so is the demand.

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According to a report published by KPMG and CB Insights, fintech funding reached $2.9 billion in the third quarter of 2016 alone. And bank spending on new technologies in North America alone is anticipated to increase to $19.9 billion this year.

What’s driving the massive growth and adoption in fintech?

Customer experience and a strategic view of APIs.

Technology has changed the way consumers do things and many of the legacy systems behind the financial services industry have failed to adapt to the evolving customer need.

Automation

Personalization

Self-Education

Peer-to-Peer Transactions

Convenience

Adapting to the new customer journeyToday’s successful fintechs are simply more in tune to the needs of today’s consumer. According to a study by EY, 43.4 percent of respondents said they use fintech products because of ease of use.

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On the commercial side, fintechs are enabling other financial services companies and other organizations to expand service offerings.

Bookkeeping + Lending

Market Data + Funds Transfer

Employee Benefits + ACH

Automated Verification + Budgeting

Advisory + Investments

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Much of this is being fueled by the API revolution.APIs, application programming interfaces, enable digital transformation and rapidly deliver convenience to customers.

In financial services specifically, APIs are completely transforming

the industry.

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A robo-advisory and online clearing firm. Apex APIs enable users to enter, review, and settle account transfers between financial institutions. Used by: Wealthfront, Betterment, Robinhood, Stash, and Personal Capital.

Notable APIs

An all-digital, German-based bank, with fidorOS, a suite of more than 40 APIs for digital banking. Used by: Countless fintechs and banks for banking, payment processing, card and user management, sign-on and identification, loyalty and rewards management, money transfer, lending, and the list goes on.

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A wealth management platform with more than 43 APIs.

Used by: Betterment, Wealthfront, Yodlee, Personal Capital, and NASDAQ, NYSE Technologies, and Direct Edge.

Notable APIs

Enables applications to sync with their users’ bank accounts to track and manage their budgets, and transfer funds.

Used by: Venmo, Gusto, TransferWise, Charity Water, Robinhood, and Level Money.

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A payment platform known for its ACH API that enables peer-to-peer funds transfer between various banks. Used by: numerous fintechs like Kill Bill and others to facilitate payments.

Notable APIs

A payment solution with a series of open APIs for managing one-time and recurring ACH, automate tokenization, e-commerce, mobile payment processing, and secure redirect payment. Used by: Organizations in e-commerce, education, travel, medical, and other sectors.

What’s next? What’s needed to thrive in the fintech revolution? And where do opportunities exist for those looking to break into the world?

Collaboration, Technology & Design, Customer Experience

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Collaboration: APIs that enable greater collaboration and integration of services will continue to grow in the shared economy.

“APIs that can sit in the middle of those who provide capital and those who have access to the customer can be very successful. This is where I see a big opportunity for fintechs.”

~ Joe Carella, assistant dean, Eller Executive Education, University of Arizona.

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Technology & Design: Blockchain, mobile payments, artificial intelligence, and product design will continue to guide the future of fintech.

“The primary driver of fintech innovation in the consumer space is around very targeted product design. It’s less about any specific emerging technology and more about targeted product design and looking for gaps in existing offerings.”

~ Chris Curran, principal and chief technologist for PricewaterhouseCoopers US.

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Customer experience: At the root of fintech innovation is the customer experience.

Emerging fintech players are gaining traction with consumers, particularly millennials, because they believe these fintechs are more intune with their needs than the traditional financial institutions. While technology is a big component, customer experience is the foundation underlying fintech success.

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