Understanding Fintech Ecosystem. Fintech is the abbreviation for financial technology which is on the rise on global level. Fintech is primarily adopted by bankers, insurer and traditional financial institutions for their services and products. It is a disruptive technology that delivers solutions to change the paradigm of traditional financial industry. Fintech startups are re-imagining the financial industry by creating a product that interact entirely on digital interfaces.
Most traditional financial firms are transforming in to Fintech by collaborating with the FinTech startups in order to compete or avoid obsolescence. In 2016 the global investment in Fintech startups according to Accenture 2016(a) reached 5.3 billion dollars. The collaborative approach of traditional financial institutions resulted in the rise of this figure as much of this investment was made by them. The consumers are also inclined to Fintech as they want more from their financial firms. And also they want the solutions on their own terms. Fintech is on the rise where the consumers are young, tech savvy and prosperous. World Fintech report 2017 suggests that China has seen the rise in Fintech at about 84% and whereas India has witnessed 72.5%. The reason is the fact that Fintech is mainly adopted by the emerging markets and where the startup ecosystem is strong in terms of technology.
Understanding FinTech Ecosystem
Fintech is the segment of technology providing solutions to some of the sectors of the financial industry. The revolution of internet led to the emergence of FinTech as various financial institutions adapted e-Finance technology. Financial institutions used eFinance for payments, stock trading, insurance and other web based solutions. As a results the current traditional business models were disrupted with the new business models of web payment, online banking etc. Similarly the growth of mobile usage has led to the growth of mobile based solutions in financial industry. The advancements in e-Finance sector and the increase in smartphone user base has led to the increase of interest in the development of startup eco-system.
FinTech is a disruptive technology that delivers solutions to change the paradigm of traditional financial industry
The Fintech ecosystem is formed by governments, financial institutions and Fintech startups together. The services offered by one institution further the services of the other ones. For example traditional financial institutions can inform on the financial service while the Fintech startup can provide the possible technological innovation for that service. All of these institutions simulate the adaptation of technology along with emergence and innovation of this ecosystem.
Fintech ecosystem can change the following sectors of the Traditional financial systems:
- Fund raising
- Mobile payments
- Crowd sourcing
- Money Transfer
- Asset management
- Digital cash payment
With the advancements of technology and the collaboration of the key elements of Fintech echo system, we will see further innovation in the above mentioned sectors of financial industry.