nts fast and easy access to financing from previously unknown people from around the world for some brilliant idea.
Cross-border money transfers, which caused quite a headache for entrepreneurs, are yet another area that innovators have completely transformed. Cross-border money transfers, which is a traditional (and expensive) banking area, was turned upside down by TransferWise. Now small companies and private individuals can transfer money much cheaper than before. Another area is non-bank loans – you can access them quickly and easily, yet the lending process is responsible.
At the backbone of FinTech growth lays rapid development of information and communication technologies during last decades and the possibilities FinTech creates. This, in turn, influences the financial habits of people – how they transfer, receive, borrow, spend and invest their money.
Significance in the modern business world and future prospects
Even though globally two thirds of bank clients use FinTech products or services, some are still faithful to traditional banks and their services. Undeniably they both have their advantages. Research shows the advantages of FinTech are agility (immediate reaction to changes in market demand), innovation and ability to attract digitally-savvy customers. Their services are used by those in favour of speed, convenience and ease of use, while banks value direct communication with their customers.
This is not going away and will only deepen. FinTech has become the “new normal”. Over the long-term, financial institutions are going to have to make some fundamental changes to their operations and adapt faster to modern requirements. Most of them still struggle with finding and implementing innovative ideas. In fact, they can learn from disruptors. Banks consider them competitors, but instead cooperation could be mutually beneficial.
Some twenty years ago it would have been unimaginable that it would take a company less than ten years from zero to rapid expansion. It took 8 years for 4finance to transform from a start-up into a successful global business with more than 2,000 employees in 17 countries across 3 continents, serving millions of customers. Each year 4finance is investing millions of euros in the development of IT systems, which are the backbone of FinTech sector. This is not money wasted. It is an investment for future growth.
FinTech may be a new kid on the block, but this kid has proven herself to be a future business model, which will force “old” market players to adapt and will provide guidance to the new ones.