This is an article “Is FinTech Finally Becoming Mainstream Globally?” by Marc Primo
Every country in the world aspires to achieve equitable financial services to its constituents. With how fast technologies such as artificial intelligence (AI) and machine learning (ML) are constantly emerging, more work systems including those in the financial sector are starting to become more streamlined and fair for all consumers.
FinTech is one such technology that is vastly improving everyone’s financial management, wealth accumulation, and business operations. Yet, no more than 60% of credit unions and 49% of banks are seeing its value in terms of partnerships. Right now, there are only 79 unicorn FinTech companies in the world comprising a little over 1% of the global economy. Still, that amounted to $187 billion by the first semester of 2019 and remains bullish moving forward.
The current gender gap
One thing that might be preventing the technology from becoming fully mainstream is the fact that there’s a current gender gap when it comes to equitable access to financial services. One study discovered that only 21% of women from a representative of 27,000 adults in 28 major economies are familiar with FinTech services which creates an 8% gender gap in that area alone. According to www.ifc.org, more than 1 billion women who are into small to medium businesses still do not have access to financial systems.
While there’s no question that men are more likely to use the advantages that such tech products offer, the challenge seems to center on how most of these products tend to work with businesses that already have existing prior financial services, tools, and aggregators. This might leave out some female-owned businesses that are only in their starting phase. Aside from this, traditional gender roles in the financial sector also lead to more adoption rates for males as more women have been found to have a more conservative stance on privacy and technology.
To address the existing gender gap, national economic policies are being drafted that are mostly anchored on the power of FinTech. Policies that account differences in financial behavior and attitudes are now being considered while constant encouragement towards innovation is pushed further to achieve more equitable services.
More can benefit from FinTech
Regardless of how the gender gap may be preventing it from becoming fully mainstream, there’s no doubt that the technology has become a huge disruptor in global economies since financial expert Chris Skinner launched his Zopa peer-to-peer lending system in 2005. Its growth remains exponential as more businesses are starting to learn that being left behind means more losses for the competition.
With services that aim to optimize services at lower costs through AI, ML, and Blockchain, FinTech is as necessary to a business as its manpower.
From banking to insurance providers, big retail merchants to startups, every business benefits from these services one way or another as it streamlines various processes such as balancing accounts payables, transferring digital payments, generating e-invoices, scheduling payments to avoid fees and penalties, and data security via the cloud among many others.
Banking as a service (BaaS) makes financial processes simple for businesses regardless of scale, making faster authorizations and transactions with users being able to do work on-the-go. Considering the optimized potential that financial services offer today, it’s not far-fetched that bank accounts may even soon become obsolete in the next ten years.
Trends that will continue to drive FinTech to the mainstream
As more enterprises embrace digital transformation, cloud-based technology continues to evolve in a way that what they can do for business is considered essential. Even partnerships between businesses today are relying on tech capabilities to deliver seamless services.
For this year, more developments are already at the forefront of FinTech across industries. For the banking sector, new niche and community-focused banks are emerging, retail markets continue to adopt digitalization, and BaaS wherein authorized banks integrate more digital services into eCommerce platforms.
On the consumer side, digital payments are becoming faster through the use of eWallets and both cross-border and real-time payments, while more lending alternatives including ‘buy now-pay later’ campaigns are being offered by providers.
Horizontal trends are also manifesting in wealth management and capital market businesses as more investments in new technologies continue to rise. Venture capital firms have already sold over $70 billion in stakes in startups, doubling last year’s figure owing to an estimated 372 mergers in the first quarter of 2020.
With the pandemic still very present and disrupting global business, such services saw virtual connectivity as a feasible solution to address cross-business cash flows. It allows for faster transactions and transfers, and proves to be more secure than going to the bank on foot or issuing checks.
Consumer trust in banks have also increased through partnerships with startups from the measly 22% of consumers who still had high confidence in banks back in 2009 to the 53% who feel that banks caused the 2008 recession in a recent study. Bank trust increased by 10% in 2019.
On the other hand, consumer trust in modern technology continues to reach an all-time high with the Edelman Trust Barometer recently reporting that 75% of the consumer population believe in FinTech’s benefits. So, whenever banks collaborate with startups, they have a better chance to increase consumer trust as well. Since banks have the target market, the technology can also broaden its reach through the use of mobile now that more than 81% of adults in the U.S. own smartphones and a total of $1.3 trillion in revenue has been registered via mobile payment services in 2020.
There’s no question that partnerships with traditional financial institutions are still important in terms of helping FinTech grow and closing the gender gap. Banks have the right audience sets for services and have long-established collaborative systems with potential networks in retail, other financial sectors, and federal governments.
By combining the capabilities of established financial institutions with FinTech, every consumer will feel empowered with more equitable banking options and better customer services. If such collaborations and partnerships remain sound in the future, both trade and business are looking at brighter days ahead with safer and more secure alternatives to manage cash transactions in the digital realm.