FINANCIAL TECHNOLOGY; Challenges for financial services.

Financial technology is said to have brought a drastic change to the financial industry, none the less, these changes have come along with it own challenges.Technology have had some serious impacts in most industries, industries that operated, long before the birth of contemporary technologies, the financial industry is no different. The birth of some financial technology ( Fintech ) has brought about positive and negative impacts to the industry.
Although all industries have their own set of challenges owing to the introduction of new technologies,the financial sector have had some serious hurdles it had to and have been facing since the birth of fintech in early 1990s.Fintechs had Put industry players on their foot, forcing them to level up by challenging the traditional financial systems to status quo.

Wondering what challenges Fintechs have brought to the financial services?. Let delve into some of the challenges traditional financial systems are facing with Fintechs in the picture.

Increased competition:
The emergence of Fintechs has changed the competitive landscape of financial services, forcing traditional institutions to reconsider their way of business. As data breaches become prevalent and privacy concerns intensifies, regulatory and compliance requirements have become more restrictive as a result. As if all that wasn’t enough, customer demands are evolving as they seek round-the-clock personalized services. The threat posed by Fintechs, which typically target some profitable areas in financial services, is significant. A research from Goldman Sachs predicted that, these startups would account for upwards of $4.7 trillion in annual revenue being diverted from traditional financial services companies.These new industry entrants are forcing many financial institutions to seek partnerships and acquisition opportunities as a backup measure.

Consumer Expectations:
With the introduction to fintechs,consumers continue to expect a lot from their financial institutions. Keeping up to the high expectations from customer is one of the many challenges traditional financial institutions face today.According to the 2019 Accenture Global Financial Services Consumer Study, one in two consumers wants personalized banking advice based on their personal circumstances. They want an analysis of their spending habits and advice on how to handle money. 64% of the participants are interested in insurance premiums tied to their behavior, such as having a good driving record.
Half the survey respondents say they still want an in-person banking experience along with a digital one. These personalized experience came about from the birth of Fintechs to the industry.

Regulatory Compliance:
Another area traditional financial institutions is challenged with the introduction of Fintechs is complying with new regulations.There are have been a number of growing regulations that banking institutions must comply with; compliance can significantly strain resources and is often dependent on the ability to correlate data from various sources. Owing to these traditional banks are challenged to upgrade to some of these new technologies that non banks or Fintechs make use of. Which without the right resources can prove to be difficult if not impossible for traditional banks to operate effectively.

These challenges can be resolved by the very technology that’s caused the disruption, on the second thought transition from legacy systems to innovative solutions hasn’t always been an easy one. In order to for traditional financial institutions to maintain a competitive edge, they must learn from Fintechs, which owe their success to providing a simplified and revolutionary customer experience.That is to say, traditional financial institutions have to embrace digital transformation, if they wish to not only survive but thrive in the current trend.

I would conclude by saying Fintech is a necessary evil to the financial industry. It us the future and if banks seeks to stay in business they have to maintain their competitive edge in the industry and level up with new Fintech trends.


Ghana
Accra.