Mobile banking, payment systems, FinTech. FinTech world leaders

What is FinTech?

It is time to sum up the results of the year 2018 – financially very difficult and very dynamic. New technologies, related phenomena and terms are coming into everyday usage in financial and legal activities.

In this article, the rules of the new game called “FinTech” are presented in an accessible way.

Fintech is a buzzword that has now become a trend in financial and business communities.

Many have heard it, but very few people are aware of the fullness of this phenomenon. Financial technologies, or FinTech – is an industry consisting of companies that use technology and innovation for their activities, which compete with traditional financial organizations, for example, banks. New technologies against bureaucracy!

Who are FinTech companies?

Global changes and general deoffshorisation occurring in the modern world require business adaptability. The boundaries between countries, currencies and even types of money are blurred.

Electronic currency, cryptocurrency and online payment are already used almost as actively as paper money. Registration of FinTech companies, FinTech business on a ‘turn-key’ basis, obtaining payment licenses and licenses for electronic money (EMI and PSP), e-commerce, creation and maintenance of investment funds, hedge funds, crypto exchanges and crypto exchangers, gaming licenses/gambling licenses – all this has reached the top of the services of consulting companies today.

Five years ago, we could not imagine that e-money and e-commerce would go fully into all areas of our life and financial activities. Today, the doubts about e-currency being absolutely adaptive, independent and viable have finally disappeared.

Currently, the FinTech industry includes both numerous technology startups and large established organizations that constantly improve and optimize the financial services provided.

These are both online payment systems and stock exchanges that help to make currency exchanges on the Internet; all sorts of financial companies that deal with electronic money, where the user can open an account online and make money transfers; online and mobile banks, as well as traditional banks that optimize and improve the quality of their service, using modern technology and electronic money. The developers of the software themselves also work in the field of FinTech.

Digital Banking replaces classic products

FinTech is gaining a huge popularity, hundreds of crypto exchanges, online banks, payment systems, hedge funds are created, ico is held. Advanced banks have already gone for their customers in digital channels, and it was a right thing to do.

According to Markswebb Rank Report, the growth in the number of users of digital banking, mobile banking worldwide over the past year amounted to 51%. And it is no coincidence: the mobile bank is convenient, understandable and always available. It allows the user to easily control all of their financial transactions, and therefore control the situation as a whole. As a result, such transparency increases the loyalty and trust of users to the bank, not only as a brand, but also as a financial partner.

The “outdated” scenarios for the provision of banking services and advice through physical visits to the branch or, in particular cases, by telephone, have been replaced by new tools: chat on the bank’s website and in its mobile application, online feedback forms and various instant messengers. The trend, which has already become a reality of today, is the integration of banks with social networks, first-line customer support using chat bots.

All modern payment systems are no less secure and reliable, and many of them are even more secured than old-fashion ones. Some have separate security code systems for reading fingerprints and iris scanner.

Also, the introduction of digital channels (messengers and services) by banks into the customer service system really gives a tangible economic effect and increases loyalty. Digital communications reduce the load on the head banks and save human resources. While digital and online banking has spread in all areas around the world, we are seeing an increase in the number of digital transactions on an annualized basis almost everywhere. In some countries, of course, the processes are much slower.

In which areas FinTech is applicable?

The development of financial technologies modernizes traditional financial services and products in several areas:

1. Payments and transfers: online payment services, online transfer services, P2P currency exchange (transfers between individuals.), B2B payments and transfer services (transfers between legal entities), cloud offices and smart terminals, mass payment services;

2. Financing: P2P consumer lending, P2P business lending, crowdfunding;

3. Money management: robo-advancing, financial planning programs and applications, social trading, algorithmic exchange trading, targeted savings services.

Modern and convenient online banks and payment systems are confidently entering the arena.

Top FinTech world leaders 2018

Ukraine and CIS

Tops of mobile banks: in Ukraine are definitely “Monobank” and “Privatbank” (it is interesting that both systems were created by the same developers, but today Monobank has jumped much further in service). In the near abroad it is definitely “Tinkoff Bank”.

Europe, USA

Outside the CIS, innovative payment systems compete for being FinTech leaders:

United Kingdom: “Revolut”, “Monzo”, “Transferwise” – payment services that offer their customers to open an account in the payment system for free.

Paysera (Lithuania) is a well-known Lithuanian payment system, a modern counterpart to a bank.

USA: “Stripe”, “Adyen” – leaders among American payment systems, offer simple account opening and low tariffs, as well as card processing.

Ranking of the world’s best digital banks

Germany: “Fidorbank”, “N26” – German online banks offering their customers to open IBAN accounts quickly and without personal attendance.

USA: “Ally Bank”, “Chime” – convenient online state banks.

The dynamics of FinTech development

Financial technologies have brought significant benefits to the user in many areas of life.

The largest banks in the world have heard the demand from their customers and immediately began to develop innovations inside. New FinTech and IT departments are being created to meet the needs of spoiled customers.

The opening of personal online accounts and the demand for similar banking products has grown in the world to 69%, which is twice as much as it was two years ago.

The transition to mobile interaction to attract customers is obvious.

Mobile sales readiness rose on 50% in the United States and Europe last year. The largest players in these regions are taking quick measures against mobile devices, while their colleagues in the CIS countries are moving much more slowly.

Apparently, for financial companies and banks that have not yet begun to develop digital products, this has become a competitive necessity and probably an opportunity to live in the financial market.

Will banks be able to create a holistic experience and online service that brings together their branches, consultants and new digital investments? The answer is definitely yes. And the implementation of banks in digital will happen faster than we all expect.

In the next article we will look at the problems that FinTech companies face when entering a competitive market.

And also we will consider the difficulties in the use of innovative banking and payment services.