Fintech has obviously been an exciting and rapidly evolving area of growth for many countries, companies, and entrepreneurs. Indeed it’s hardly recognisable from its humble beginnings. At some stage, the realisation came that Fintech companies were going to have to transition from being disruptors to collaborators, and to become a more functional and integrated part of this industry.
This is where Devie Mohan’s new book, ‘The Financial Services guide to Fintech’ comes in. In it, Devie charts the complete journey of fintech companies within the financial service space. She explores this journey all the way from the early days, through their emergence during the 2008 financial crisis, and to the relatively mature market that we are currently witnessing.
Devie Mohan is an experienced Fintech industry professional, the co-founder and CEO of Burnmark, a fintech research company, a contributor to the ING group Think Forward Initiative, and sits on the Editorial Board for the Journal of Digital Banking. Additionally, she is a well-regarded influencer in the Fintech space.
Tracking the Fintech Journey
Financial Services are inexorably linked to banks and the banking system, and therefore it is no surprise that Devie spends a lot of time in this book focusing on the evolving relationship between the banking sector and their fintech counterparts. This book is definitely an interesting read, and the gripping narrative that is the evolution of Fintech within the Financial Service sector, keeps you entertained throughout.
When it comes to the relationship between the banks and fintech companies, Devie suggests that banks are concerned with profitability and customer service more than anything else “Developing profitable products and customer satisfaction is the ultimate goal and a driver of success.” It is therefore through this lens, she argues, that a bank will judge their present and future relationship with any fintech company. For instance, Banks would initially regard fintech companies as being a potential threat to their current and future profitability. Once fintechs started to grow and become a major player in the financial sector, banks viewed them as rivals, rather than either a) collaborators b) not on their radar.
She then goes onto illustrates how the banks started to realise that, as the fintechs grew and became more established, that they wouldn’t be going anywhere in a hurry. Therefore, banks were going to need to figure out a way to co-exist with these new players – by collaborating. What’s more, they began to notice that fintech companies offered a lot of things that they could not – due to legacy issues and their less-than-agile nature. This strengthened the will of banks to now change tack and to collaborate and partner up with these fintechs.
Fintech Customer Service – the way forward?
The second point that she tackles is the issue of Customer Service, something which many banks have been particularly struggling with in recent times. For banks, she explains, they have preferred to emphasise “just how safe your money will be with these venerable institutions,” rather than being known for having an excellent relationship with their customers.
However, the financial crash shook that all up, and banks now find it “much harder […] to present themselves as watertight and utterly dependable.” This is where trendy, modern startups, with excellent communication skills, can come in. Banks are now “getting involved with fintechs thanks to the outstanding customer experience that digital baking collaboration offers them.”
In order to make her points about the fintech story more effective, she presents them alongside numerous case studies and business examples, of which there are of course plenty. She explores the effect that Plaid has had on the financial sector, with its scalable API “having a democratising effect” with regards to the technical infrastructure startup fintechs need to access and process customer’s financial data. Their approach has led to them getting many major clients, such as Chase, Stripe, Capital One and Coinbase.
She also delves into one of the most vibrant and exciting parts of this sector right now, mobile-first banking. Pepper is one such mobile bank that she delves into, who have recently “established themselves in this niche.” As for innovative tech accelerators and incubators, she highlights Barclays, which launched in 2012 and now has accelerator programmes being run all around the globe, and works to deliver “networking and mentorship from one of the Barclays and offering up to $120,000 as an investment along with other corporate partner perks.”
She also takes a moment to chart and explore what the next steps of this industry, such as utilising data analytics, machine learning, and AI “In this climate, AI will increasingly be contributing to decision making, and big data will be invaluable.” Another potential benefit she sees just on the horizon is the fintech revolution of access to finance, such as peer-to-peer loans, via a digital/mobile platform, that will “pave the way for billions of people who currently have no access to banking services to circumnavigate the centralised banking system,” and she makes particular reference to developing countries with this point. She also explores the future with reference to the replacement of the current banking systems, the power of Big Data, and the rise of Robo-advisors as some of the major fintech events to watch out for down the line.
In short, this is a fascinating read, backed up by a mixture of professional observation, real-world examples, and major studies. From the origins of fintech in the financial crisis to the present situation today where they have a seat at the table with the major banking players, by way of the major factors that helped them to this position. She explores the development, current state, and future innovations that fintech is likely to experience sector by sector, from digital payments and financial solutions, to RegTech, Big Data and Machine Learning. On top of this, she tries to identify the place that fintech now occupies, amongst the major banks, financial service providers, and Governments. It could quite well become the definitive guide to fintech within the Financial Services industry.
Buy the book here on Amazon.co.uk