Article | March 12, 2021
2020 has been a challenging year for all industries. As COVID-19 continues to create uncertainty, many FinTech brands are under stress for a number of reasons. However, FinTech brands can use this opportunity to build their reputation and emerge as a substantial entity after the crisis has passed. Many FinTech organizations are putting in their thoughts on big ideas and innovative digital offerings that meet customer demand for a frictionless and seamless banking experience.
This article aims to list down the challenges faced by FinTech brands and effective ways to resolve them:
Challenges Faced by FinTech Brands in Generating Demand
In this unprecedented time, lead generation is on high priority to acquiring new customers. The pressure is to get on board with working remotely, adapting to new challenges, changes, and dealing with customers having urgent & new requirements. FinTech companies have faced unique challenges over the past year. They are using complex technologies to develop better products & services for businesses. Replacing traditional methods to improve financial services need strategic planning, technological advancement, and original content marketing ideas to survive in the digital age.
Read on to find out the challenges faced by FinTech brands in generating demand for their solutions.
Impact of Covid-19
COVID-19 continues to create uncertainty due to the widespread lockdown. Many FinTech brands are under the stress of counting recent losses, cost-effectiveness, and rethinking their offerings to adapt them to changing needs. The banking & finance industries are now shifting from response to recovery. They are now investing in introducing new FinTech apps for the post-pandemic world.
According to a recent survey, almost 82% of the citizens don't want to visit their banks and try digital apps to carry out financial transactions. FinTech brands are grabbing this opportunity to reach out to a new demographics by testing and adding new product range. Today, popular FinTech apps include mobile banking, e-wallets, contactless payments, international money transfer, retail banking, stock trading, FinTech loan app, InsurTech, etc.
Go mobile Go digital.
As a FinTech brand develops innovative solutions to be used during the pandemic, they also need to figure out ways to promote these products and services to reach their target audience. You are getting acquainted with various social media platforms, and understanding your target audience will help you reach wider. Identifying the top social media platform that works best for your product and service through content marketing will boost your customer base, reduce churn, and attract potential customers. Other functional content marketing solutions that you can think of includes web – content syndication, social media, mobile app – advertisements, and brand awareness content.
Inefficiency to maintain a healthy lead pipeline
Several FinTech brands are reassessing their approach, their budget, goals, and their offering. Those quickest to adapt to this change will lead the market and continue to grow. According to a research report, B2B specialists make 48% purchases online, up from 38% before the COVID-19 outbreak; this trend is likely to increase.
FinTech companies need to generate more new leads than ever to maintain a healthy lead pipeline. To do so, they need to be where their audience is.
• Finding the best social media platform for your industry
• Rethinking events – Online & Offline
• Exploring online opportunities – Webinars/Podcasts/Live Streaming/ Live Q&A/Online Sessions/ Live Feeds
• Publish demo videos
One of the most significant issues and struggles with a FinTech brand is to gain the trust of their consumers. Consumers usually select financial service providers as they are trusted by their families for generations. These financial brands should be able to handle issues such as security, confidentiality, and digital fraud. The brand should also comply with the latest financial regulations that need to be communicated. Social media is an ideal platform for brands to connect with their existing and potential customers. To build trust & loyalty between the company and the end-user, brands must focus on helping their customers rather than selling.
Inadequate tech stacks to work remotely
The inability to work remotely gave rise to new entrepreneurs with knowledge of finance who developed innovative solutions to help FinTech brands connect remotely. Another essential aspect that has evolved this industry is remodeling the user interface and customer experience. FinTech brands are largely coming out with innovative solutions that can help with:
- Financial close
- More visibility and transparency to financial transactions
- Centralized data
- Cloud support
Cybersecurity is a common problem across industries. With the advent of advanced technologies rises the need to develop stronger security. Considering the threat posed by cybercriminals and fraudsters, the financial system needs to handle this risk smartly. All the financial information remains sensitive, whether it's your social security number, card number, PINs, or password.
With the growing number of smartphone users, FinTech becomes cheaper and easy to use. The process and services that were once monopolized by the banking sector are now available for all, helping develop innovative solutions, lower operating costs, and improve financial organizations' efficiency.
FinTech brands should target millennials. They are fueling the market among money transfer applications and personal investment applications. Financial brands need to focus on financial management, lending, financing, and insurance applications. According to a report, 33% of millennials believe they won't need a bank at all in 5 years.
Expanding FinTech press/media
The increasing use of financial technology has given rise to a number of media houses covering them. Over the year, dozens of FinTech focused media sites, podcasts, and newsletters have been launched. Several authoritative publications have hired beat writers to pump up stories on trending topics and subject interest.
The FinTech market is growing in numbers, and the industry is heading towards the trillion-dollar industry. To grow as a FinTech brand, you need to ensure that you are better than your competitors. These challenges are temporary and can be overcome through practical approaches and technological advancements. While the challenges in deploying a FinTech firm continues, we have given a clearer perspective on how to overcome them in this blog. Overall, digital transformation for customer satisfaction is what is necessary.
Q1. What risks are associated with FinTech products and/or services?
A1. Cybersecurity, consumer data privacy & security, consumer data rights, online frauds and scams; cross-border transactions, anti-money laundering and countering terrorist financing; and digital identity risk are the key factors in the FinTech market.
Q2. What are the benefits of FinTech?
A2. FinTech has helped us drive positive change in the traditional financial services and foster innovation by creating products and service that benefits customers and small and big enterprises. Some of the benefits of FinTech products and services include convenience, digital resolutions, hassle-free practices, flexibility, high rate of approval, upgrade payment systems, customer services, and revenue, user-centric, transparency, and many more.
Q3. What are the challenges for the financial services industry?
A3. As mentioned in the blog, there are 7 key challenges faced by the FinTech Market they are:
Inefficiency to maintain a healthy lead pipeline
Inadequate tech stacks to work remotely
Need to expand FinTech press/media
"name": "What risks are associated with FinTech products and/or services?",
"text": "Cybersecurity, consumer data privacy & security, consumer data rights, online frauds and scams; cross-border transactions, anti-money laundering and countering terrorist financing; and digital identity risk are the key factors in the FinTech market."
"name": "What are the benefits of FinTech?",
"text": "FinTech has helped us drive positive change in the traditional financial services and foster innovation by creating products and service that benefits customers and small and big enterprises. Some of the benefits of FinTech products and services include convenience, digital resolutions, hassle-free practices, flexibility, high rate of approval, upgrade payment systems, customer services, and revenue, user-centric, transparency, and many more."
"name": "What are the challenges for the financial services industry?",
"text": "As mentioned in the blog, there are 7 key challenges faced by the FinTech Market they are:
Inefficiency to maintain a healthy lead pipeline
Inadequate tech stacks to work remotely
Need to expand FinTech press/media"
Article | February 26, 2020
Natural language processing, (NLP) is one AI technique that’s finding its way into a variety of verticals, but the finance industry is among the most interested in the business applications of NLP. In fact, according to our AI Opportunity Landscape research in banking, approximately 39% of the AI vendors in the banking industry offer solutions that involve NLP.
Article | April 15, 2020
The 21st century doesn’t fail to surprise human society with its innovation. Blockchain is going as a part of mainstream business operations and it's impossible to keep FinTech unaffected.
As the new universality of the twenty-first century, technological advancements have now unquestionably seeped into the workflow structure across multiple industries and are an indispensable element of varied business processes. Assignments that once needed human hands, bulky machines, and physical currencies have now been efficiently digitized. Mobility, cloud services, and consumers who have grown up in the digital age are forcing a CHANGE.
Technology has been the core of a number of disruptive trends in financial services and it is a driver behind three key themes; the first being convergence of other industries into financial services that is frankly leveraging data and technology, the second is wholesale sort of interruption or disruption of business models and new entrants entering into the competitive landscape and certainly last is a much more transformative journey and that is the leveraging of things like Blockchain Technology, which is completely going to change the financial services ecosystem and marketplace in 2020.
Anyone with an internet connection can now engage in day-to-day banking activities, trading and investment in the stock market, widen e-commerce platforms, make online payments, exchange currency online, undertake equity funding, and more. Similarly, new players are now experimenting in different areas of financial activity such as banking, payments, peer-to-peer lending, wealth management, and more.
FinTech itself is at the cusp of the renovation as if there was a need. That flux of change is coming from the headwinds of Blockchain swinging its wings. Its stagnant style of doing business is apparent to all. What needs to be examined though, in this distinct phenomenon is the contribution of Blockchain which has enhanced this progressive revolution.
Table of Contents
•Why use Blockchain for Fintech?
•How is it currently managed?
•How big is the impact of Blockchain in FinTech?
•Blockchain for Global Payments/Cross-Border Transfers
•Blockchain in Trading and Trade Finance
•Blockchain in e-KYC Utilities
•for Credit Scoring
•Conclusion (All in all)
Why use Blockchain for Fintech?
When we talk about FinTech, or technology for finance, we are going to touch a very delicate aspect. We are in 2020 and banks still demand people to send them a fax with their information, because regulators that are there are not catching up with the technology. So Blockchain for FinTech is a very powerful tool. But until the regulators don’t allow it to be deployed in full, recognizing digital signature, recognizing a contract, a time stamp by blocks in a blockchain is going to be hard.
How is it currently managed?
Let’s understand this with an example - payment with a credit card. Before the payment with a credit card arrives in our bank account, there are 12 companies with 12 databases. They bring the data one to the other before it arrives to the bank account. With the blockchain, it’s up in a single transaction. So in many cases for remittance and for rebalancing accounts, even between branches of a single bank, a blockchain solution allows to remove error in transaction. There are banks that have branches in different time zones. At the end of the month, one time zone branch writes the transaction in the previous month, the headquarters writes the transaction in the next month. And when the month goes to level, it creates a lot of confusion. The accounting system based on blockchain technology will guarantee that all is aligned perfectly.
How big is the impact of Blockchain in FinTech?
Blockchain surely is born for fintech and is already bringing quite a lot of interest. The reaction of the financial industry is being very positive, one of adoption. When the financial board saw blockchain, rather than getting scared, they started adopting the technology for their own good. In fintech, blockchain is making a big influence to start with.
According to a survey on the financial services sector and fintech conducted by PwC, around 77% of the financial services industry plan on adopting blockchain by 2020. Banks being 1/3rd of the institutions surveyed have shown an inclination in incorporating blockchain in their operations as was reported by a study published by Accenture and McLagan (January 2017) that made mention of at least eight of the ten biggest global investment banks comprising the blockchain route.
Blockchain for Global Payments/Cross-Border Transfers
Blockchain-powered payments are hyper-secure and private. Each user has personal cryptocurrency keys that they can use to conduct transactions safely. The blockchain ensures that only participants involved in a particular transaction know the details of this transaction. Any changes to the transaction are possible only with the consent of all participants.
Learn more: https://capital.report/blogs/tracking-the-future-of-cross-border-payments-with-ai-ml-and-blockchain/8124
As per Deloitte, blockchain-based payments from business-to-business and peer-to-peer results in 40% - 80% reduced transaction costs. They’re also settled within seconds. Yes, it would be a paradigm shift but as per a projection by Mckinsey & Co. blockchain could drive $50 - $60 Billion in transcontinental B2B and $3 - $5 Billion in P2P payments respectively.
A blockchain records and validates every transaction and administers transactions in a way that no one can tamper with or delete them post-execution. FinTech companies such as Aeternity leverage this advantage of the blockchain to protect payments.
Another benefit of blockchain is that it eradicates the need for a mediator to handle financial services like money transfers. This is a huge relief for businesses that provide peer-to-peer (P2P) transactions.
Learn more: https://rubygarage.org/blog/how-blockchain-works#article_title_1
Blockchain in Trading and Trade Finance
The trade financing field requires lots of tedious paperwork and bureaucracy. Stock and share purchases have to pass through brokers, exchanges, clearing, and settlement. Shipping, for example, requires client-side etiquettes like lading bills, invoices, and the letter of credit. Each transaction is typically completed within three days. Yet transactions can be delayed when trading transpires over the weekends.
The blockchain technology can release traders from troublesome checks of counterparties and optimize the complete lifecycle of a trade. Using a blockchain, companies can intensify trade accuracy, speed up the settlement process, and reduce contingencies.
Ornua and Barclays completed the world’s first blockchain trade transactions in 2016, employing four hours rather than a week on a letter of credit — a document guaranteeing the export of $100,000 worth of agricultural products. IBM & Maersk collaborated for a global trade platform to attain scalable solutions of Blockchain in Fintech. Furthermore, Forbes released its report of Top 50 Billion-Dollar companies who’re exploring the scope of implementing blockchain solutions.
Learn more: https://www.forbes.com/sites/michaeldelcastillo/2019/04/16/blockchain-50-billion-dollar-babies/#3d2cf7be57cc
Blockchain in e-KYC Utilities
Identity can be undoubtedly established by government-issued documents such as driver‘s licenses, social security cards or passports, etc. Establishing identity through KYC verification is a lengthy procedure.
While exploring the bank-driven approach to KYC customer record sharing, there is always a debate around centralized versus decentralized approaches.
According to Niall Twomey, Chief Technical Officer, Fenergo, The centralized model offered centralized KYC utilities, controlled by a single entity. The main proponents and vendors behind these models at the time were incumbents with huge data resources and reach, which makes sense when it comes to creating a KYC utility. However, each utility had separate financial institution members, meaning that the overlap of customers and the ability to re-use customer information between them was seriously diluted. This was a key showstopper for utilities at the time. This led to a shift towards a decentralized model, where control is shared and participants coordinate with each other without going through a single intermediary.
Blockchain is a form of distributed ledger technology, having a specific technological foundation and cryptographic features that enable the storage of data in an immutable (unchangeable) ledger of ‘blocks’ of records. The blocks of records are linked in groups or a ‘chain’, which are maintained by a decentralized network, where all records are approved by consensus. It can build trust between financial institutions as it is auditable, and can help streamline the attestation process; ensuring clients are in charge of their own personally identifiable data.
The use of blockchain, currently best known as the foundational technology for Bitcoin and other cryptocurrencies, could overcome inefficiencies and duplication of effort in KYC information gathering between legal entities within a more comprehensive financial corporation or even between competing banks.
The blockchain offers a digital identity system. Using this system, clients need to go through validation just once and can then use this verified identity document to conduct transactions all over the world. A blockchain allows clients to
• Manage their personal identity data and reputation;
• Share their data with others without safety concerns;
• Log in to digital services without passwords;
• Digitally sign any type of documents, such as claims and transactions.
for Credit Scoring
FinTech companies are widely using blockchain to cater to the unbanked population lacking CIBIL score and helping them get credit. Apart from the unbanked and underbanked, two more groups of consumers — credit invisible and unscorable — lack banking services. The Consumer Financial Protection Bureau (CFPB) shows that one in ten adults in the USA don’t have any credit history, and 19 million Americans have unscored credit records.
Unscorable consumers mean people who have credit records at least in one credit reference agency but the data is too out-of-date to generate a reliable score. Consequently, millions of people are deprived of loans, mortgages, the ability to rent apartments, and more.
Traditional banks and lenders approve loans based on a system of credit reporting. Blockchain technology unlocks the possibility of peer-to-peer loans, complex programmed loans that can approximate a mortgage or syndicated loan structure, and a faster and more secure loan process in general.
When you apply for a bank loan, the bank evaluates the risk involved. They do this by looking at factors like your credit score, debt-to-income ratio, and homeownership status. This centralized system is often unfriendly to consumers. The Federal Trade Commission concludes that one in five Americans have a “potentially material error” in their credit score that negatively affects their ability to get a loan
Alternative lending using blockchain technology offers a cheaper, more efficient, and more secure way of making personal loans to a broader pool of consumers. With a cryptographically secure, decentralized registry of historical payments, consumers could apply for loans based on a global credit score.
All in all
In fintech, blockchain finds application in areas like digital ID, customer authentication, insurance, to name a few. Blockchain practitioners are experimenting with this technology to bring out new use cases and applications to solve the repetitive and complicated issues in the fintech industry.
Blockchain in fintech is anticipated to reach $6,700 million by 2023 in the United States. Financial institutions will use blockchain for smart contracts, digital payments, identity management, and trading shares. The blockchain sector in fintech has been intended to provide banking with a more seamless and efficient experience. We will soon see the process of cash to crypto and vice versa to become ubiquitous.
Blockchain technology has tremendous potential to deliver excellence in core areas of banking and financial institutions’ business model. But to succeed in implementing blockchain, financial institutions should collaborate with the ecosystem before they launch blockchain solutions.
Article | July 29, 2020
Retailers and restaurants are increasingly offering contactless payments as a safer alternative to cash in the new-normal of COVID-19 while improving the overall customer experience. Tapping to pay in the U.S. has increased 150% year over year from March of last year. More U.S. consumers continue to receive new contactless cards, with more than 80 million Visa contactless cards added in the first six months of 2020 and 300 million expected in market by the end of the year. It’s clear: workers and consumers alike want to minimize personal contact as much as possible.