By
Mayowa Adebajo
April 18th, 2024
Fintech is fluid and as it continues to grow, certain trends begin to form. In this article, we will have a look at 5 of them.
Financial technology (fintech) is becoming the lifeline of both the finance and technology sectors. These two sectors have always had a thing or two in common and have worked hand-in-hand for a long time, with one always needing the other. However, and in recent times, the synergy between both sectors has been a whole lot more pronounced with multiple use-cases, up to the point where they are almost inseparable, hence, fintech.
With all of the advantages of fintech, it still does get a bad rap. However, it’s important to note that everything that is created for all of its advantages and great uses, can also very easily be exploited as well, turning a small – and somewhat ignorable – group of people against it. The growth of fintech has created trends along with it, some of which are wildly kicked against, most of which are largely embraced. Here are a few.
Increasing Risk for Traditional Firms
To a large extent, the very nature of financial technology is disruption. All of the fintech offerings and options that already exist or still will in the future, generally seek to run in direct competition with some of the biggest firms, disrupting these firms even when they don’t realize it. Technology – whether financial or not – is generally aimed improvements and if fintech seeks to improve the financial status quo, traditional firms are at risk. Today, solutions like Ripple’s On-Demand Liquidity already settle cross-border transactions in record time and as Ripple grows, there might come a time when the regular channels will be completely relegated.
Ensuring Financial Innovation and Modernization
The growth of fintech is unstoppable and some traditional firms have now realized that. The only way for any of these firms to make sure that they do not significantly incur the risk of relegation is simply to get with the program. Today, many firms are starting to invest hundreds of millions of dollars, into fintech research, which will not only ensure they stand the test of time but will keep them at the forefront of technological innovation.
Customer Will Keep Being King
Historically, competition has been terrible for merchants but has always been great for customers. If two companies offer the same services, but there’s one who does it better, customers automatically move towards the latter. This makes the former sit up, and figure out ways to retain its customers and probably even steal customers from other firms. Fintech will always definitely ensure that the customer is king and will keep being king.
Fintech Will Keep Growing
Continuing with competition, companies always seek to outdo themselves. The by-product of a strong desire to outperform competitors is a direct contribution to the growth of fintech. If one company offers something, the only way for a competitor to offer something better is to begin in-depth research, which will add a quota, however small or large, to the growth of fintech.
High Demand for Tech Skills
While tech skills have always had considerable demand, fintech automatically means that this demand will only increase. The financial environment of today has almost put strong financial skills at par with strong tech skills. The growth of fintech means that the creation of specific programming, algorithms, tech statisticians, tech analysts and even data scientists, are in very high demand and will continue to remain so.
Today, there are already quite a number of digital-only banks that are beginning to give traditional banks a run for their money as they are a lot cheaper to run because teams don’t need to spend a lot of money on brick-and-mortar branches, or a large number of staff. Artificial intelligence has also merged with fintech with accommodation for blockchain technology as well.
By 2020, a lot more money will be spent on investment, many partnerships will be formed, and a lot more regulatory provisions will be created to oversee the sector. Tech skills will be needed more than ever before.