How do these leaders see fintech evolving, and what impact is it having on the traditional banking and financial services sector?
The amount of fintech companies around the globe has caused significant concern to the traditional banking and finance sector.
While mainstream banking institutions are in no way facing obsolescence, fintechs have caused them to have to rethink their approaches.
It varies as to whether the industry views these companies as competitors, or embraces partnerships with them for expansion.
What’s undeniable is, being able to offer greater convenience and consumer-focus, these companies are having considerable impact.
We asked the LinkedIn community how fintech is evolving, and what it means for traditional banking and finance.
Here’s what you had to say…
Ron Arnold
Managing Director and Founder: 11eight
Fintech has rapidly evolved in recent years, transitioning from niche solutions to providing scalable propositions solving real problems. Unburdened by legacy systems and with an ability to navigate regulations, fintechs are agile and adaptable, constantly experimenting with new technologies like mobile-first solutions, and AI-powered automation. This agility allows them to take calculated risks to develop niche financial products tailored to specific needs. Tiimely is a great example – using technology and data to deliver a fast, friction-free mortgage experience for customers at low cost.
This agility presents a double-edged sword for traditional banks. While facing potential disruption, they also have an opportunity to collaborate. By partnering or investing in fintechs, banks can access their cutting-edge technologies, risk appetite, and laser focus on specific needs. This “fusion” could lead to a more dynamic and competitive financial ecosystem, ultimately benefiting consumers.
The future of finance lies not in a winner-takes-all approach, but in harnessing the strengths of both established institutions and nimble innovators. Through collaboration, traditional banks can leverage fintech’s agility and ensure their continued relevance in a rapidly-evolving financial world.
Also on The Big Smoke
Bridget Nichols
Managing Director: Primrose Advisory
Fintech firms are playing an increasingly important role in the overall development of the financial markets landscape globally. Offering new ideas, speed to market, growth opportunities, and solutions to many historical financial market infrastructure and regulatory challenges, fintechs more than hold their own with respect to investment opportunities. Key themes across payment rails, financial product innovation/access, and the use of digital technologies to replace financial intermediary services are particularly exciting to observe.
Fintech evolutions this decade include increasing attention being paid to governance/regulation and consumer/user protection mechanisms, facilitating wider-scale institutional adoption of these technologies. Financial markets nirvana is T+0 settlements being possible across all financial instrument classes.
The most topical item in this space currently, in my opinion, is the impact BTC ETFs are having on traditional banking and asset management models. As these products evolve, institutional allocators won’t be able to continue to ignore them. Proof that you can teach old dogs new tricks!!
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Dr Tanvir A Uddin
Founder and CEO: Wholesum
Not since the invention of paper money has there been such significant disruption and evolution in the nature and mode of financial services. The emergence of fintech is reshaping the global financial landscape, transcending borders, and revolutionising traditional banking and finance models worldwide. From the rise of blockchain technology facilitating faster and more secure transactions to the proliferation of mobile payment platforms democratising access to financial services, the impact is profound.
In emerging markets, fintech startups are bridging the gap for millions of unbanked individuals, offering them avenues for savings, credit, and investment previously inaccessible through traditional channels. Wholesum is building connections for Australians to invest safely in emerging markets. Meanwhile, in developed economies, fintech disruptors are challenging incumbents with innovative solutions in lending, wealth management, and insurance.
As fintech continues to evolve, collaboration between incumbents and disruptors is becoming increasingly common, driving greater efficiency, transparency, and inclusivity in financial systems worldwide. Collaborations such as distribution partnerships (Seven and Raiz) and banking warehouses for fintech lenders (NAB and Brighte) will be crucial for long-term viability of fintech scale-ups while adopting more socially-responsible and customer-centric practices within incumbents.
The future promises a more interconnected and resilient global financial ecosystem, powered by technological innovation.
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Naby Mariyam
CEO and Founder: Coverhero
Banks and financial services generally couple bank products together and leverage economies of scale. However, they are still constrained by legacy thinking, and a slow-moving, risk-averse culture of bureaucracy. Despite the regulatory hurdles, open banking, consumer data rights, big generational transfer of wealth, the buying power of the younger consumer market, and the adoption of AI (technology) can outpace traditional banks/insurers/superannuation/brokers/lenders etc if there isn’t a sufficient collaboration between these two industries at speed, and with a humble attitude. This collaboration requires the regulators to fully understand and embrace the rapid adoption of technology by the consumer market, and encourage more competition in the financial services sector.
Two foundational shifts happening at a speed that cannot be stopped is the movement of data and how this data is used to train AI models. If the financial services sector isn’t involved in this process at the speed that the technology is moving, the future of finance could face a Kodak moment for several incumbent companies. History tells us this when looking at companies like Amazon, Facebook, or any other big tech company that has transformed/disrupted their respective industries due to a confluence of events such as big data, cloud technology, and AI.
These industries weren’t regulated like the financial services industry. While the financial services industry is heavily regulated, the move toward consumer data rights will shift the landscape and the power toward consumers. This will have a major effect on the incumbents as consumers will move towards better services/technology-based solutions that meet the needs and demands of the consumer market. This is all possible in a blink of an eye. The next 10 years are going to be radically different for financial services with new challenges and major opportunities.
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