Traditional banking is still struggling with age-old inefficiencies, but the emergence of intuitive fintech innovations appears to point to a turning tide for access to truly global financial services.
Fintech has been characterized by the ease with which the technology can deliver global banking services by leveraging digital technologies like APIs and blockchain to counter old traditional barriers in finance.
These barriers include higher costs, slower transaction times, and infrastructure limitations. However, solutions such as intuitive cross-border payments, lower entry barriers, and streamlined operations are helping to transform access to financial services.
The potential for fintech innovation is high. Following an initial acceleration in adoption during the pandemic years, the average fintech customer growth rate has begun to stabilize at 37%, indicating that consumer appetite remains strong.
In terms of agility and ambitious new services provided, fintech innovations can be true financial game changers. With this in mind, let’s take a deeper look at how the global banking landscape is transforming as the technology continues to emerge:
Embracing Simplicity
Fintech solutions are actively automating and simplifying key financial processes while lessening the need for intermediaries.
These qualities have helped to drive operating costs lower for firms, while customers benefit from lower associated fees, higher interest rates for savings accounts, and faster transaction times.
This has helped to create an environment where traditional banks simply can’t keep up with the advantages and capabilities of fintech financial services due to the costs associated with using physical locations and hiring support staff for branches.
Borderless Transactions
Cross-border payments have long been forced to counter the challenges of legacy banking systems, which can disrupt the efficiency of even transactions made using fintech services.
Fortunately, innovators are overcoming sluggish traditional processes by implementing real-time cross-border payments that lean on blockchain technology and smart contracts to rapidly process payment systems and settle transactions.
With the help of blockchain, money can reach recipients instantly, and with more than 60 countries either implementing a local real-time payments scheme or planning one, borderless transactions appear to be one of the most transformative efficiencies brought by the evolution of fintech.
At present, a widespread lack of compatibility between different real-time payment schemes means that international payments are still having to counter long-standing hurdles, but there are several initiatives underway, such as SWIFT GPI and Visa Direct, that are intent on introducing compatibility across real-time transactions beyond borders.
Bridging Access Gaps
Critically, fintechs support global adoption by expanding access to financial services for those who are excluded because of their location. By opening up access to customers in poor and marginalized communities, fintech is fast becoming a driver of financial inclusion.
With an estimated 1.2 billion adults in the world categorized as unbanked, the challenge of accessing the services that could help lift communities out of poverty can be especially challenging. Fintech services are helping to bridge these gaps in ways traditional finance can’t.
For instance, the Kenyan mobile phone-based money transfer service, M-Pesa, has opened the door to banking and transferring money securely with the use of mobile phones, helping to facilitate savings, support business creation, and lower the cost of remittances.
Enhanced Personalization
Fintech firms have also consistently shown a greater level of adaptability when catering to the specific needs of customers. Unlike their traditional counterparts, fintechs are building transparent solutions through digital-first technologies that can significantly reduce onboarding times for individuals and institutions alike.
By prioritizing user experience, fintechs can deliver an intuitive customer experience no matter where they are in the world or the cultural banking variations they may be accustomed to. This enters the fray in the form of adaptive interfaces that automatically detect the most commonly used services and offer them first on landing pages, simplified navigation, and real-time spending insights to help support financial goals.
Around-the-clock multilingual support is also a standard feature among modern, globally focused fintechs.
Banking in New Locations
There’s also more evidence of fintechs uniting banking services in entirely new jurisdictions such as China, which has long been wary of Western firms when it comes to providing essential services.
Local mobile payment systems like Alipay and WeChat Pay have helped to provide Chinese consumers with an entire alternative payment ecosystem that helps to leverage fast and convenient transactions, even within rural areas with limited access to traditional banking services.
For businesses seeking to market and sell products in China, the consumer data generated by these fintech services can prove to be invaluable for better understanding new markets and building a strong presence in an entirely new geographical area.
Embracing Global Fintech
Fintech is helping to send finance global, thanks to a new emphasis on accessibility and efficiency in ways that traditional banks continually struggle to keep up with.
The introduction of borderless services with the help of blockchain technology and the bridging of long-standing access gaps to essential banking tools mean that innovative fintech services open the door to a truly global financial ecosystem, helping to benefit customers and institutions alike.
