Development in digital technology for financial services – FinTech – might possibly be the most dramatic and challenging change the finance industry has ever faced.
So far, fintech innovations seem to have been mostly aimed at the consumer and retail markets, but B2B services will possibly follow shortly. How ISO20022 and Blockchain can contribute to this development, is interesting.
Privacy Matters
Many of the available solutions are exciting and clever, but they also trigger concern and challenges. Privacy matters are the biggest issue from the customers perspective, on the other hand, customers get a well of benefits: Increased availability, faster and better services, and probably better prices as well.
For the established financial industries, the development represents a significant threat to business models, growth, and profitability. The new technology increases the number of potential players, as well as market transparency. It also challenges established business models with new distribution and communication channels, and with more efficient processes. An example of this is digital lender comparison services.
New Opportunities
Fintech development represents potential security and regulatory challenges. Although new technology has several security challenges, they also create opportunities for technological innovations to provide increased security.
Fintech trends also open new opportunities for risk management. For example, a number of companies are using big data, social media, and real-time information for credit-assessments of their customers – instead of historical statistics on payment behavior, occupation, and income. Time will tell which method is most accurate.
Efficiency and Quality Improvement
However, creating value from digital development is not just about the power of innovation. Equally important is the ability to implement digital developments in the business model and management. For the financial industry, it’s important that the new technology not only becomes a cost factor in trying to attract and retain customers through a differentiation strategy but also can be used for real internal process efficiency and quality improvement.