The Fintech World

What is “Fintech”?  According to, INVESTOPEDIA it is “a portmanteau of financial technology that describes an emerging financial services sector in the 21st century.”  The term used to only apply to back-end processing for customer and trade financial institutions.  This term has now expanded to include any technological innovation in the financial sector, including such things as education, investments, fundraising, and cryptocurrency.  Accenture reported Fintech investments around the world increased from $930 million in 2008 to over $12 billion, early in 2015.  By the end of 2016 the total investments grew to $24.7 billion, after experiencing a drop from $46.7 billion, according to KPMG.
Start-ups and traditional finance companies are active in Fintech.  Start-ups don’t resemble your traditional banks or insurance companies.  Each company usually offers a direct solution to a problem or area.  Examples of Fintech companies include:
  • MX –  data-driven money management solution provider
  • Transferwise – international money transfer provider
  • Envestnet – unified wealth management provider
  • Sofi – online personal finance provider
Banks need to be aware of the evolution that is happening.  The Fintech companies like the ones listed above have moved into the banking sector and while some companies can assist the banking industry, others have the potential to infiltrate the banking market.  Fintech offers an assortment of different financial services.  Many of these services were previously provided to customers exclusively through banks.  Personal finance, lending, and investment apps are starting to emerge as contenders.  All of these apps give customers alternative options to products that large or small financial institutions offer.  Please see below for a list of example companies.
Personal Finance
Personal Lending
Investment Facilitators
Cropped shot of black female's hands holding mobile phone with blank copy space screen for your text message or promotional content. Young woman watching videos using cell phone sitting at cafeteria
Many people, including me, have said that the way to consumers today is through technology. This alternative competition solidifies that need.  Community banks need to embrace mobile technology and run with, not from, it.  Many of these Fintech companies are making it easy for potential customers to complete many of their banking tasks right from their own home.  However, there are some Fintech companies that banks can embrace and incorporate into there system. One example of this is MX, enabling financial institutions to gather and present data from the customer’s external financial accounts.
This may not always be possible for banks to offer; however, if you offer “on the go” technology with customer service, you can simultaneously increase customer loyalty and draw in potential customers.  Remember, competition is key and makes our industry better.  It gives us the push to embrace change and develop new technology to change and enhance the future.  Now is the perfect time to become a leader in the banking industry with Fintech innovations.

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Levi Kalb

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