First international money transfer, next credit cards: the ever-evolving world of fintech
Fintech: it’s the financial buzzword that’s suddenly everywhere. But it’s much more than just a bit of briefly fashionable jargon. Put simply, it’s the software and computer technology that’s becoming increasingly important in the world of finance, and it looks set to completely transform the way banks, businesses and consumers access and control their money.
We've talked in the past about how fintech is revolutionising the way we send and receive money overseas. Now we explore how it's transforming the rest of our finances.
The financial services sectors set to get a technological revamp
In London alone, there are more than 12,000 fintech startups, testifying to the rapid growth of financial innovation. And according to a recent report by consultancy firm McKinsey & Company, other services are beginning to follow this sector's lead to make up that number. The report identified a few key areas that tech startups will make a real impact in, which include:
- non-mortgage retail loans, including credit cards
- payments processing
- SME enterprise lending
- wealth management.
For banks, it’s likely to mean smaller profits. McKinsey’s report suggests that this digital revolution could see profits from non-mortgage retail lending decrease by as much as 60%. Payments processing, mortgages, SME lending and wealth management could be hit by up to 35%.
The results fintech will deliver for customers
But for customers, the changes are likely to be overwhelmingly positive. As we've discussed previously, international money transfer startups are undercutting traditional providers thanks to lower overheads, flexible payment systems and a supportive business environment. The same will be true for startups in these sectors, resulting in cheaper services that don't compromise on quality.
To date, the uptake of fintech hasn't been as sweeping as you might expect given its attractions. A World Retailing Bank report recently suggested 29% of consumers would consider moving from traditional banks to fintech firms in the future. That's not a huge number, but if McKinsey's report is anything to by, that's set to change in the very near future.
We're poised to enter an era that puts the customer first in finance. Now, it's just a question of making use of the services available and refusing to settle for those that offer poor value. For the latest news on fintech innovations and tips on how to get the best deal on your next international money transfer, check out our regular blogs.