Financial technology trends to watch out for
Technology knows no bounds, and one of the world's oldest industries serves as a shining example of that.
Financial institutions have long held practices, remaining stalwarts of the old while the new is ushered in elsewhere. But the industry has changed drastically over the past decade, and the number of global fintech companies has jumped 50 per cent since 2011, according to PricewaterhouseCoopers (PwC).
Regardless of whether an organisation is large or small – even bank or startup – processes previously set in stone are changing thanks to innovative technologies and the theory that they do more good than bad.
Australia's future looks bright
While London and New York remain the financial powerhouses of Europe and North America respectively, a new report from KPMG asserts that Australia holds the ability to position itself as the fintech hub of Asia. Industry growth has seen the number of organisations blossom from under 100 in 2014 to almost 600 in 2017, with nearly two-thirds of them located in Sydney.
The findings show that the country has the potential to be a global leader in peer-to-peer payment solutions, blockchain networking and regulatory technology. The unique characteristics of the average Australian consumer is prompting competition far and wide – roughly three-quarters of millennials would prefer products and services from Google or Amazon rather than traditional banking institutions, Australian FinTech reported.
In the near future we'll see two trends coming from the region:
- Startups such as Acorns AU gain more market share as the idea of non-conventional finance goes mainstream.
- Financial service companies will evolve and place a greater focus on using technology to improve customer experience and their own processes.
The key to unlocking digital disruption
Roughly 61 per cent of organisations located in the Asia-Pacific region believe innovation is very important to their success, yet just 14 per cent are prepared for it, PwC reported. The key for financial companies and institutions alike will be an agile, decentralised IT department.
Just 14 per cent of companies are prepared for innovation.
In this regard, having an effective IT integration strategy in place is vital to rolling out products for customers with little trouble and a high level of execution. The study believes that rather than having a business-wide list of solutions – and a subjective ranking as to when they'll be incorporated – each department will be able to launch the platforms it needs to succeed.
It's expected by PwC that spending on IT shifts away from maintaining infrastructure to incorporating mobile apps, cloud technology and better use of big data. Companies that take a timid approach to innovation will ultimately see themselves fall behind the competition in an industry that's becoming heavily focused on change.
Going in a new direction
Many of the barriers to digital disruption in banking institutions are simply the high regulatory standards they are held to. It's what has kept many organisations from adopting public cloud technology – but it's a trend that PwC reports will soon go away.
The advantages of moving to the cloud are becoming more clear with each passing day, and the expectation is that by 2020 it'll become the most popular infrastructure. It offers the agile deployment models that will guarantee success looking forward, and the improvements in regulatory technology allow executive boards to place more trust in it.
While in the past some businesses only leaned on the cloud for non-core processes, advancements in peer-to-peer payments and other services driven by the customer experience are prompting a new way of looking at it. Organisations will ultimately need to take a look at their cloud computing capabilities and assess whether they have the platform in place to grow revenue over the next few years.
The rise of fintech is creating more competition than ever in financial services. Contact an ANATAS representative today to learn more.