According to Fortunly, 88% of financial institutions believe that they will lose their foothold in the FinTech industry to innovative new startups while 55% of banking industry representatives point to the differences in management and culture as the biggest disruptive factors which FinTech startups bring to the table. This data is backed by studies done by Finances Online which state that 82% of traditional banking intuitions plan to partner with FinTech startups in the next 3-5 years, while 35% of FinTech startups on the market operate from the US (5,779) as of 2019.
This means that FinTech can offer something to everyone whether you are looking for work or your entrepreneurial breakthrough in creating a startup. However, in order to get to the bottom of why FinTech startups are set to start a revolution in the banking industry, we should take a look at several points which work in their favor. Let’s take a look at what makes FinTech startups different from traditional banking and discuss their continued impact on the market from the perspective of both industry representatives and clients in 2020.
- A Clean Slate
Traditional banking institutions are often prone to government regulations and legalities which limit their ability to develop beyond a certain point. FinTech startups, on the other hand, come with a clean slate which is dictated only by their ideas, resources and the partnerships they make along the way.
This makes the notion of starting a small firm in FinTech with the intent to innovate in the banking industry more than just an idea. Rather, it provides both B2B companies and industry professionals with an opportunity to pitch in and become tangible stakeholders in the next big step in the banking industry on a global level.
- Innovation & Disruptive Development
The purpose of creating a startup in the first place is to put an original, disruptive idea on the market and gauge the public’s interest in its continued development as time goes on. Traditional banks lack this ability due to the aforementioned regulations, bureaucracy and a plethora of shareholders all of which need to approve everything that goes public.
This severely handicaps their ability to stay in line with new FinTech trends, client requirements and global standards, often citing the famous “if it works, don’t fix it” proverb. On the other hand, their startup contemporaries have more freedom to explore groundbreaking changes to the financial market as well as to test their applications and public implementation viability before monetizing it down the line.
- Personalized Talent Management
By their very nature, FinTech startups start small and expand as their service portfolio grows. The talent management and human resource sectors in FinTech startups are focused on more personal, hands-on processes of hiring, retaining and onboarding professionals into their businesses.
Compared to traditional banks which operate as large machines whose structure consists of mazes of cubicles and data sheets, startups can offer more creative and meaningful experiences for their employees. This makes a FinTech startup a much better place for a business or financial management graduate compared to traditional banks which have long since standardized their hiring and training processes with no sign of change on the horizon.
- Growth of Mobile Banking
While traditional banking institutions have made a push into the mobile space recently, their implementation and development leave much to be desired. This can be attributed to their prominently-traditional (brick-and-mortar) roots which most bank clients have become used to over the years.
In comparison, FinTech startups have a much better chance at introducing global mobile banking platforms which will primarily focus on cloud services and digital payment features. The continued client interest in banking versatility and accessibility coupled with affordable smartphone and internet access across the world marks an important turning point in FinTech startups’ dominance when it comes to mobile banking.
- Streamlined Support & Servicing
Due to the operational scale and complexity of contemporary banking institutions, it can be difficult to humanize with their representatives on any level, especially when it comes to support and servicing. However, given the smaller, more focused nature of FinTech startups, every client has an opportunity to connect with the firm and reach a solution to their issue quite quickly.
Most importantly, FinTech startups will often aim to involve each client in their continued development efforts through feedback questionnaires, post-support surveys and even testimonials to be published down the line. This approach to client servicing and public relations makes startups stand out from traditional banks and allow them to offer more value in the form of tangible customer experience.
- Advancements in Data Security
Implementing disruptive changes in cybersecurity and software infrastructure is dangerous in the banking industry for a number of reasons. Given the sheer size and revenue on the table of most large banking conglomerates, introducing any change into the way in which they handle user data is slow and prone to failure.
Startups stand on the other side of the spectrum when it comes to data security innovations and information privacy management of their clients and their finances. New technologies are tested in controlled environments and implemented quickly and without downtime, ensuring high levels of safety and reliability when FinTech startups are concerned.
A Revolutionary New Horizon (Conclusion)
The question of whether startups will become even more relevant in 2020 rests on the shoulders of creative CEOs and teams with disruptive FinTech ideas. Investing time and resources into these startups can be worth your while both from a managerial and employment perspective depending on what you are looking for. Whatever the case may be, FinTech startups are here to stay and continue to showcase what the financial industry can become when its development is fueled by passion rather than the bottom line of shareholders and board members.
Bio: Bio: Angela Baker is a self-driven specialist who is currently working as a freelance writer at writing services such as Top Writers Review where she tries to improve herself and her blogging career. She seeks to discover new ways of personal and professional growth and is convinced that it’s important to broaden one’s horizons. That's why Angela aims to develop and improve her skills throughout writing to help to inspire people. Also, she writes for LiveInspiredMagazine.