Fintech defines companies that are involved in the financial technology sphere. Usually, these are small startups that realize IT solutions for the online and mobile payments, big data solutions, and alternative finance.
Statista: in 2016, United States had the highest Fintech transactional value, that was 769 billion U.S. dollars. China held the second place with 443 billion U.S. dollars. Then went United Kingdom (167 billion U.S. dollars), Japan (137 U.S. dollars), and Germany (117 billion U.S. dollars). Speaking about consumer finance the leading position was held by the U.S. again, followed by United Kingdom, China, Germany, and Canada. In the Fintech business sector, the winner was China.
Big banks still have the leading positions by allocating venture capitals and other means. However, many banks reacted differently to the Fintech progress. According to Statista, 43 percent of global banks started to startup programs to incubate Fintech companies, bringing them in-house. 20 percent established venture funds to support Fintech companies. The same number of banks launched a partnership with Fintech companies. 10 percent acquired them and 7 percent founded their own Fintech subsidiaries.
However, 28 percent of financial companies regard Fintech companies as competitors. 20 percent of UK banks treat Fintech startups as a threat to their business. As stated by Starling bank Report, 64 percent of big banks regard Fintech firms as a competitive threat, 20 percent of banks will look for partnership or acquisition of the Fintech firms.
Fintech is an extremely promising market, for instance, 49 percent of the U.S. respondents, aged 40 and 49, image making a huge part of their bank transactions via smartphones 4 years from now (Statista conducted the survey in 2016).
Fintech companies are steadily gaining their popularity. For example, 32 percent of respondents, digital and technological managers, admitted having been engaged in partnership with Fintech companies. Statista forecasts that in 2017, bank will spend on technologies and innovations up to 19.9 billion U.S. dollars in North America.
Banking executives, more precisely 46 percent of the ones surveyed by Statista, consider accounts and investments as the most promising opportunities for the Fintech companies. 73 percent of the managers believe that Fintech is able of substantially reducing cost. 51 percent of the executives believe that Fintech can improve data and analytics in their organizations. 23 percent of capital in the private Fintech companies was invested in the development of payment systems.
Starling Bank Fintech Report defines core technologies in the Fintech sphere, such as payment (12 billion U.S. dollars), software (almost 5 billion U.S. dollars), data and analytics (4.5 billion U.S. dollars), and platforms (2.5 billion U.S. dollars).
FinTech will be paying a lot of attention to the mobile shift, while more and more smartphones are penetrating the market. From the marketing perspective, Fintech companies will invest more in the video, as more and more users are preferring this type of content when it comes to the social media marketing.
Artificial Intelligence is going to be actively utilized by banks to improve the organization workflow, like RBS implementing robots to leverage customer interaction. This will substantially enhance user experience. Machine learning will be applied to make big data analysis safer and faster.
To sum up, Fintech sector has a tremendous potential. Many consumers have been already using it, many are ready to join. Although a lot of banks see a threat in the Fintech sphere, many of them are ready for partnership with the Fintech companies. Glorium has a bunch of projects in finance and is always glad to share the experience gained.