Assessing the current ecosystem and evolution of FinTech

By Ameer Naraynen, Head of Systems Development, Bordier & Cie UK PLC

What, for you, are the benefits of attending a conference like the ‘X-Tech Europe Summit’ and what have attendees learnt from your session?

The biggest benefit of attending a conference like this is the opportunity to learn from and to interact with peers and subject matter experts in the rapidly evolving area of FinTech. This space right now has a multitude of solution providers and a regulatory environment that can quickly get confusing and complex. A conference like X-Tech can educate individuals on various issues and uplift companies to make new technological avenues for the near future. The sessions themselves were very informative, but the opportunity to make new contacts was more invaluable as this space continues to evolve and mature.

With the session I was part of, attendees gained valuable insight into the finer details and results of the 2019 FinTech Leaders Survey and how this has transpired into critical steps being made this year and going into next year by leading financial service providers and professionals alike.

Finally, attendees learnt about how we look at the future of the FinTech ecosystem and not see it as a bubble but as a goliath expansion that will bring more benefits to both services and end-users.

How can risk professionals best define the current FinTech Ecosystem?

In recent times we’ve seen the Fintech industry dramatically increase in activity and influence on the world. Funding has already reached new highs globally with researching outlining overall funding hitting billions of dollars with more and more time spent in R&D and disrupting the outdated technological systems.

The ecosystem is expanding at a unprecedented rate with South America and Africa emerging with viable new solutions. Some fintech companies, including several InsurTech companies, have dipped into new markets to escape heightened competition.
Emergent areas like blockchain and distributed ledger technology (DLT), as well as digital identity, are gaining traction and giving professionals new ways on provided more unique, safe and secure solutions to end-users.

Why is the rapid evolution of the FinTech industry a key concern?

Some will regard the growth of the industry as concerning due to FinTech firms falling behind traditional financial companies and loosing the ‘human touch’ aspect with their operating models leaving clients easily feeling they are carrying out business with a robot or a faceless entity. This could prove to throw clients off doing more business in todays digital world with FinTech companies relying too much on technology and every present issue of cyber security to bring the industry back down to Earth. With the rise of the FinTech industry, comes with it more technological dangers with cyber security a main area every company should invest and have confidence in.

What are the challenges of maintaining customer satisfaction vs cost reduction?

Whilst FinTech companies try to disrupt the world with new services, new technologies and provide more for less to consumers, companies need to ensure cost reduction is not achieved at the cost of growth. To remain sustainable, competitive and profitable, companies need to manage costs efficiently. Cost management, though, does not necessarily mean cost control and cost reduction. Short-term cost reduction exercises may result in quick benefits. However, such an approach may not be sustainable in the long-term and could result in the company losing its competitive edge. A comprehensive and detailed cost-benefit analysis of processes, products, people and infrastructure can help companies strategically plan an approach to efficiently manage costs and improve profitability.

On the other side, customer satisfaction is fundamental and in todays evolution of the industry, data is an important aspect. With concerns around cyber security and various data protection aspects all around us, companies must ensure their processes and procedures are kept up to date and are followed to maintain a high level of customer satisfaction. In the end, no company old or new should think of cutting the wrong corners or they face an uphill battle to even stay in business in today’s ecosystem.

What do you predict as the key opportunities and challenges of the next twelve months?

Several industry groups have come together to commercialise technology and apply it to real financial services scenarios. We expect this surge in funding and innovation to continue as blockchain and FinTech move at a rapid pace into more sectors within the market.
As with the rise of cryptocurrencies and the public loosing trust in banks holding their hard-earned cash, I believe the use of the blockchain “public ledger” will go on to become an integral part of financial institutions’ technology and operational infrastructure.

Finally comes the challenge of cyber security. As financial services executives within the industry continue to report their concerns or actual daily issues about cyber-threats, hackers will improve their techniques in gaining information and the threats themselves will become more sophisticated with the increased use of mobile technologies by customers, including the rapid growth of the Internet of Things (IoT).