What Fintech will mean for your company

The growth of Fintech means that it is no longer wise to ignore the movement of decentralisation in the financial services sector. The time has arrived to have a constructive plan on how to engage with this movement.

The rise of Fintech has been described in many ways, but at its essence it is one peak amongst many to come in a movement of decentralisation in the delivery of products and services. Fintech is a phenomenon that offers businesses and individuals the chance to genuinely consider the possibility of having their financial affairs managed by three separate solutions in a more efficient way than one solution, for the sake of stability and convenience.

The financial services sector globally, but especially in Australia, is one where retail and investment banks, insurance companies and payment service providers have succeeded by consolidating their products into packages, offering customers the convenience of having all their financial services in one location.

But what does the decentralising nature of Fintech mean? It means a wider choice of financial products and services, where the option of moving away from a packaged service means potentially a cheaper and more efficient service driven by new technologies and business models.

The first prescient decision for any company would be to analyse the benefits of their current payments solution, financial management software and access to credit. The inherent cost of a decentralised option is to invest time into considering a potentially less consolidated solution in order to obtain a cheaper and more efficient solution.

For instance, for years businesses and individuals have had little choice when deciding which payments network or software to use for their point-of-sale machines or sales departments. Fintech means a business can force a bank to compete for their account under the threat of moving to a Fintech company that offers only a payment solution and invests in improving that solution.

However, the opportunities presented by Fintech are not limited to relationships where your company is serviced by a financial services company; it also extends to relationships where your business provides a service to a financial services company.

The development of finely tuned algorithms and machine learning systems can enable vendors of software and hardware to make their own market offerings more robust. Vendors can look to partner with smaller Fintech companies to offer comprehensive data gathering and analysis services. Similar opportunities are open to data centre providers, who should be thinking about pitching to their corporate customers on how they can offer cloud computing solutions ready for intrabank blockchain ledgers.

To sit and wait for financial technologies to become the inevitably safe choice will be imprudently cautious. To see the current growth in financial technology as an isolated phenomenon is to not see the benefit of engaging early and reorganising a business for a technologically sustainable future.

Saranga Sudarshan is a Research Analyst, ICT Practice, for Frost & Sullivan Australia & New Zealand. He studies the Fintech sector in the Asia-Pacific region, tracking the nascent but quickly growing field and its disruption of traditional financial services.