Why Every Company Will Become a Fintech Company | Future

Why Every Company Will Become a Fintech Company | Future

In today's rapidly evolving technological landscape, it's becoming increasingly clear that every company, regardless of their industry, will ultimately become a fintech company. The convergence of technology and finance is reshaping the way businesses operate and interact with their customers. From small startups to multinational corporations, the integration of financial services into existing business models is inevitable. But what exactly does this mean for companies and how can they navigate this transformative shift?

The first key aspect to understand is the rise of infrastructure "as a service" in financial services. Just as companies use cloud computing to access computing power and storage without the need for large physical servers, the same concept is being applied to financial services. This means that companies no longer need to build their own financial infrastructure from scratch. Instead, they can leverage existing platforms and APIs to handle tasks such as tracking customer transactions and facilitating payments. This infrastructure allows companies to focus on their core business while leaving the financial aspects to specialized fintech providers.

One example of this is Propel, a company that serves millions of families on Electronic Benefits programs such as food stamps. By leveraging existing financial infrastructure, Propel is able to provide a seamless and efficient experience for their customers. This highlights the importance of integrating with payment systems and understanding the regulatory requirements that come with handling financial transactions.

Speaking of regulations, compliance is a crucial aspect of the financial services industry. Banks, for example, are required to comply with a set of laws designed to prevent money laundering and ensure the security of financial transactions. This involves monitoring hundreds of sanctions and terrorists lists, as well as reviewing customer transactions for any suspicious activity. However, the current system is far from perfect, with a significant amount of laundered money going undetected. This presents an opportunity for companies to innovate and develop more effective solutions for combating financial crime.

Another area where companies can differentiate themselves in the fintech space is through the use of data analytics and machine learning. By analyzing large volumes of financial data, companies can identify patterns and detect fraudulent activities. For example, fake identities often exhibit different loan repayment behaviors compared to real individuals. By leveraging advanced analytics, companies can identify and prevent fraud more effectively, protecting both their customers and their own financial interests.

One of the unique aspects of this disruption is that it doesn't necessarily result in a winner-takes-all scenario. Unlike other large industry changes, where one dominant player emerges and others are left behind, the fintech revolution allows for multiple winners. This is because financial services can be tailored to specific customer segments and niches, allowing companies to carve out their own space in the market. As a result, we are seeing a proliferation of new financial services companies, as well as existing brands expanding into the fintech space.

So, what does all of this mean for companies looking to navigate the fintech landscape? Here are three actionable pieces of advice:

• 1. Embrace collaboration and partnerships: Instead of trying to build everything from scratch, companies should look for opportunities to collaborate and partner with established fintech providers. This allows them to leverage existing infrastructure and expertise, saving time and resources.

• 2. Invest in data analytics and machine learning: By harnessing the power of data, companies can gain valuable insights into customer behavior and identify areas of improvement. Investing in data analytics capabilities and machine learning algorithms can help companies stay ahead of the competition and better serve their customers.

• 3. Focus on user experience: As more companies enter the fintech space, competition will intensify. To stand out, companies should prioritize user experience and design intuitive and user-friendly financial services. This includes streamlining the onboarding process, simplifying payment flows, and providing personalized recommendations based on customer preferences.

In conclusion, the convergence of technology and finance is transforming every company into a fintech company. By embracing this change and leveraging existing infrastructure and expertise, companies can unlock new opportunities for growth and innovation. However, success in the fintech space requires a deep understanding of regulatory requirements, a focus on data analytics and machine learning, and a commitment to delivering exceptional user experiences. By following these principles, companies can thrive in the evolving financial services landscape.