What is the new wave of banking disruption the world is currently living?During the current decade, bank leaders should rethink their aspirations in the light of this new reality we are living and strengthen the core foundation of their financial institutions. Do not let short-term actions distract from the development of a bolder vision. Instead of shying away from change, leaders must figure out how best to deal with this wave of destruction. And these are the tech disruptors that will be giving them the hand during this turbulent period. As only from a synergy a new financial reality will soon be born.
Part 2: FinTech? PayTech? BaaS!
Where could those synergies be born from? This is where techs with their disruption come to scene! The two huge branches that aim to revolutionize the financial field and bring it to a brand-new level are fintech and paytech. We are already used to hear about both and yet, what are the differences?
A paytech project uses technology to enable the electronic transfer of value. Paytechs are fundamental to the vibrancy of the world economy as the better payments are executed, the more efficiently values can be moved worldwide.
Beneath the notion of payment which is “transferring value from one party to another”, lies a deeply intricate network of organizations, technologies, regulations, political, social and even cultural interests. Thus, many other actors are essential for the safety, flexibility, speed and convenience of payments.
The payments value chain is how data travels through the ecosystem to perform a transaction. This data consists of the basic transaction information such as date, type, amount, destination and account number. However, additional information is often related to the basic payment data. This can be information about the goods or services procured, the context of a transaction, or any other information a party may wish to send alongside with the payment “message” itself.
Fintech is a financial technology, an industry encompassing any kind of technology in financial services — from businesses to consumers. Fintech describes any project and/or company providing financial services through a specific, often Blockchain based, software or other technology and includes anything from mobile payment applications to cryptocurrencies. Also, fintech describes any company using the internet, mobile devices, software technology or cloud services to perform or connect with financial services.
At its early development stage, fintech referred to technology that was applied to the back-end systems of banks or other financial institutions and has since grown to gather around other types of applications and services including the consumer-focused ones. All this to change the whole financial management customer journey. According to different statistics, an average customer is using three to five applications to cope with his/her everyday financial activity. At the same time, the numbers before the COVID-19 crisis showed 2 billion unbanked individuals that are also the core audience for fintechs. As a result, both investors and entrepreneurs have considered the fintech field as one of the most promising ones. Thus, fintech has become one of the most competitive startup landscapes, whether the paytech one seems to be less explored and yet as interesting.
And yet, the current disruption wave shows that separated solutions or partly developed financial technologies solve a very limited number of customer pains without healing the whole situation. Thus, all of those new and highly prospective technologies should come together to form a completely new type of a financial ecosystem.
What does it look like?
To be continued.
