EXPERT VIEW
The financial services industry is experiencing a time of unprecedented change. And the principal driver for this change is fintech. Financial technology, or fintech, is re-modelling and re-characterising the industry as we know it, as it undergoes a period of rapid global growth.
Indeed, investment in fintech in the Middle East alone for 2017 was forecast to increase by 270 per cent at the beginning of the year, with this figure expected to rise exponentially in the short to medium-term.
Fintech is now ubiquitous in consumer finance and everyday business transactions, making waves way beyond the conventional tech world. The escalating importance and relevance of fintech is prevalent worldwide, providing the crucial components of speed, convenience and accessibility to the delivery of financial services.
This so-called fintech revolution is transforming the financial services sector, and will continue to do so. As a standout example, mobile banking apps have completely revolutionised the way traditional banking activities are carried out; our money has gone mobile.
With the number of people owning at least one smartphone in the UAE — forecast to reach 789 million by 2019 — mobile banking plays a large and very important part in our everyday lives. Indeed, research leading up to the annual Gitex Technology Week in Dubai shows substantial growth in the banking habits of the high-earning, always-connected under-35s who require and expect constant mobile banking access.
Following the changes we initially saw with the boom of the dot-com era, now, daily banking activities are now accessible via ultra-convenient mobile apps.
In addition to mobile banking apps — robo-advisers, peer-to-peer lending and cryptocurrencies such as bitcoin and Ethereum — have all played a role in this colossal upheaval of the financial services industry.
Perhaps the key reason for this monumental fintech revolution goes back to the global financial crisis of 2007-08. As financial services providers were dealing with the severe blow dealt by the crash and adapting to the modified regulatory landscape that came about, fintech developments were, at the time, not at the top of the to-do list.
As such, many of the most groundbreaking technological innovations were coming into play, that have, simply put, changed our lives. Indeed, for major global players such as Amazon, who came to the fore at the time, the progression and development of technology saw them go from not making a profit to becoming an overwhelming online retail success story worldwide.
In a similar vein, fintech firms are plugging the gaps between what traditional financial services companies are offering, and what consumers now expect, to facilitate their busy daily lives.
Although the prospect of significant change can be daunting for some, particularly when it comes to managing their finances, the shifts in fintech trends are happening at an unprecedented speed.
Indeed, fintech is enhancing the customer experience like never before. People now expect a personal service and access to their finances at any time, wherever they are in the world. Thanks to fintech, they can check their account balance, send transfers or report a stolen credit card in seconds from their smartphone. The days of fitting in to conventional High Street banking hours, or calling stolen card helplines on holiday are no more.
Furthermore, fintech allows access to financial services to millions who may reside in remote areas. For example, money can be sent to support family and friends leaving overseas who rely on an income from elsewhere.
In addition, fintech can help those who may not be sufficiently high net worth to suit the prejudices of some traditional financial companies. Indeed, fintech can offer financial advice to these individuals and businesses, helping them to save and invest their funds.
Moreover, businesses benefit from fintech as it allows them to reduce costs, diversify and cater to evolving client expectations, all working towards forming solid business relationships.
Moving forward, there will undoubtedly be challenges ahead for fintech, as with any sector. However, the rocketing rise of financial technology is helping to form a far more globally connected world, giving us the ability to manage finances quickly and efficiently, and allowing more people than ever before to meet, and perhaps even surpass, their financial ambitions.