The future of the financial services industry from Fintech

Fintech has accelerated the disruptive innovation of the financial industry: Payment, Insurance, Deposit & Lending, Capital funding and Investment Management.

1. Payment
The main innovation of fintech is to make it easier and more valuable for consumers to pay with mobile devices and the Internet, and to enable cashless transactions.
(1) Mobile Payment, such as e-wallets and merchant mobile payment platforms
(2) Integrated Billing, such as mobile shopping and payment Apps integration
(3) Streamlined Payment, such as the machine-to-machine payment model
(4) Bio-Biometrics and Location-based Identification
The main changes are focused on innovations in transaction behaviours and habits between front-end consumers and merchants. The real innovation is the development of a new payment path. The current global remittance method is still through a centralized clearing mechanism, but there are still some obstacles when transferring money from one country to another. In the future, decentralized currency and mobile money will create competitive pressures on existing financial institutions that adopt traditional exchange models.

2. Insurance
Insurance is the slowest innovation in the financial industry. However, in recent years, the online information centralized platform will differentiate the traditional insurance sales channels of personal and small-scale commercial insurance, which mainly focused on the relationship between insurance companies and customers. In addition, the emergence of automated equipment (such as self-driving cars or higher-sensitivity sensing devices) has reduced the risk. In addition, the remote communication technology also makes it more convenient for the insurance industry to monitor the risks and data processing of insurance subjects in real time, which also brings changes to the insurance technology, product design and business model.

3. Deposits & Lending
After the 2008 financial crisis, traditional financial intermediaries adopted strict inspections on loans to control credit risks. Borrowers with poor credit ratings but who need funds often cannot obtain loans from traditional banks. Some of alternative lending mechanisms, such as Peer-to-Peer Lending (P2P), it has created innovations for traditional financial institutions. These platforms will serve customers with poor credit but may go up to win customers with better credit ratings. This also requires traditional financial institutions to build alternative deposit platforms. In addition, financial technology has also shifted customers’ preferences for access to financial products and service channels. Traditional banks provide diversified and concentrated products, but innovative service platforms can provide a single, specific channel, such as P2P and automated assets. Management platforms, etc., form a competitive relationship with traditional banks, and as customers increase their reliance on and trust in technology, a platform that can provide convenient and digital transaction experience will become their advantage in mastering the relationship with customers.

4. Capital funding
The traditional method of fundraising requires financial institutions to assess the business plan and credit risk of those who wish to raise funds, which is relatively unfavourable for start-ups and small and medium-sized enterprises. The alternative online fundraising platforms, such as crowdfunding platforms, will expand the capital funding channels for these new ventures or SMEs.

5. Investment management
In terms of wealth management, after the 2008 financial crisis, customers became distrustful of banking specialists. Therefore, the market leader, combined with technology, took advantage of the trend, such as automated wealth management platforms, Social Trading Platform and even Algorithmic Trading, which provides risk calculation services, provide low-cost, sophisticated, and customer-oriented wealth management channels. On the other hand, technology companies that provide wealth management transaction outsourcing services for traditional financial institutions, such as cloud storage and online trading platform construction, have also help financial institutions reduce the clumsy procedures and costs in the transaction process.