FinTech: The Future Of Financial Services

At the heart of financial services’ disruption is a loyalty crisis. Every participant within the financial services sector is facing a loyalty crisis right now. It does not matter whether you are in wealth management, banking, securities, or insurance, this loyalty crisis is creating an incredible disruption in the markets. What the data has evidenced is that 50 per cent of the time, there is an attrition when a transfer of wealth happens. When a child or a person inherits money, 50 per cent of the time, the benefactor of the inheritance takes their funds to another institution. Statistics further demonstrate that more than 70 per cent of clients in banking would prefer to work with a technology provider, such as Apple Pay or Google Pay, rather than a traditional financial institution.

The financial technology sector sits squarely as the central disruptive force, a force that has redefined the financial services sector and uprooted established and archaic banking structures and processes. There have been numerous advancements within the financial technology sector that have transformed clients’ relationships with financial services. These include blockchain technology-based solutions, mobile banking applications, artificial intelligence, robo-advisers, digital payments, and more.

Critical competitive advantages for FinTech over traditional financial institutions have been the ease of doing business, and the heightened and more enjoyable experience. These are driven by the increasing societal access to smartphones and mobile connectivity, as well as the desire and need for immediacy. One can perform banking transactions in the palm of one’s hand, as opposed to visiting a branch or calling a contact centre. The generational shift also plays a part in FinTech companies capturing a larger market share. Currently 2.6 million Baby Boomers are dying each year, while Millennials and Gen X generations are expected to inherit US$83.5 trillion in the next two decades. Numerous studies show that younger generations have a strong affinity for technology within their utilisation of financial services, demanding short, quick account onboarding processes, and immediacy to requests through various technological means. Younger generations are utilising mobile payment options for everything, from splitting vacation costs to paying lease payments.

More than younger generations, all of us can safely say that we desire low friction and immediacy more than ever. A client’s trust in a financial institution rests on that institution’s ability to deliver its products and services with low friction, ease, and immediacy. Gone are the days when a bank charter or a bricks-and-mortar building made clients trust you. Now and in the future, a financial institution’s ability to be trusted will be based on its ability to use technologies to deliver the utility the client craves. One of the most successful deposit products in the world, Alipay, does not even involve humans. It is completely automated, yet Alipay has a higher trust rating than traditional financial institutions in China. Trust has to do with utility, the deployment of technology to afford ease and immediacy, and utility provides that.

Furthermore, other factors continue to fuel the drive of FinTech providers. The growth of open banking, which allows outside developers to access bank data via APIs, encourages competition, and furthers innovation in the financial services sector, is another notable trend that will shape and adapt financial services’ future. With the utilisation of open banking APIs, financial institutions are able to securely and adequately access their clients from financial data, allowing them to offer customised solutions and additional efficiencies, such as streamlining the loan application process. We also continue to hear of the increasing incorporation of artificial intelligence and machine learning, both technologies which help to make financial services more efficient, and more custom-designed and tailored for the client. Artificial intelligence and machine learning algorithms can analyse financial data in order to determine a number of helpful factors, including creditworthiness, and help to specify and identify trends and optimise loan terms for clients.

We also see greater utilisation of client relationship technology, which ascertains a client’s values and priorities, and helps financial institutions speak to the client in the frequency and manner they would like. Technology helps financial institutions think differently about how they work with clients. Importantly, technology allows the team members that work for financial institutions to focus on rendering the highest standards of excellence to clients, and maximising their productivity in an environment with the client’s interests at the forefront of their mind.

Technology helps us to answer the questions: (1) How are we engaging clients? (2) Are we connecting with our clients on a level that is real to them? (3) Are we tapping into the full potential of our clients? (4) Are we responding to our clients in a timely, efficient manner? (5) Are we prioritising the matters that are of significance to our clients? (6) Are we showing clients the passion we have for our products and services, and the passion we have to partner with our clients in fulfilling their objectives? (7) Are we delivering a high-quality work product? (8) Are we empathising with our clients? (9) Are we truly enriching the lives of our clients?

FinTech capitalises on the pain points of traditional financial institutions. It capitalises on the failure of traditional financial institutions to answer these questions. The failure of traditional financial institutions to innovate, anticipate clients’ needs, and provide the value they expect in the future, will continue to require the adaptation of the financial services sector from larger traditional financial institutions to ‘tech companies offering financial services’.

To thrive in an environment where the future is FinTech, financial institutions must be at the forefront of change, be proactive and not reactive, and stay ahead of their clients’ needs. The world is evolving, and it is up to all financial services participants to ensure that they are not left behind.

Dr Iyandra Smith Bryan
Dr Iyandra Smith Bryan (“Dr Bryan”) is a trailblazing leader and advocate for women in finance, based in Nassau, The Bahamas. With more than 14 years of financial services experience, she excels in leadership, transformation, stellar execution, and innovation. Currently, Dr Bryan serves as the Chief Operating Officer of a global fintech brokerage with users in more than 56 countries. As Chief Operating Officer, she is a strategic partner to the Founder and the CEO, providing strategic oversight across business lines, while spearheading global expansion efforts, and managing trading operations, financial audits, legal and regulatory matters, contract & project management, human resources matters, strategic partnerships & communications, as well as sustainable and impact investing. Dr Bryan oversees and manages primary business development initiatives, from development through successful implementation, and coordinates the execution of key strategic initiatives in line with the corporate mission.