FinTech generally defines any business that uses the internet, mobile devices, digital technology, or cloud computing to provide or communicate with financial institutions. Though, the term is for business-to-business (B2B) innovations, many fintech programs that bridge consumer finance with technology for the convenience of use.
Unprecedented advances in financial technology (‘fintech’) have occurred in the past few years like mobile banking innovation, online currencies, blockchain and the ledger technology with peer-to-peer and marketplace lending.
From outside the conventional banking and financial structure, most fintech innovation has emerged (and more expected through fintech research), driven mainly by a few of the organizations.
In an unrestricted (or relatively loosely regulated) setting, these non-bank entities can explore and often concentrate their operational activities specifically on the offering of a specific collection of new financial products and services.
As the situation shows, the fences that have long enclosed the mainstream financial and banking system are increasingly deconstructed by Fintech innovation powered by the nonbank companies, creating a radical change by questioning conventional production chains, marketing strategies, and marketing mix. Fintech technology is now dramatically improving the experience and aspirations of consumers by fostering a more customer-centric and collaborative approach to financial and banking services.
Moreover, recent fintech advances provide new possibilities for the development of consumer value by allowing a smarter understanding of customer expectations and the introduction of new personalized services. To help performance improvements, risk management, and strategic decision-making, research methods that capture and incorporate structured and unstructured data are now accessible.
FinTech With the 2020 Lense
Digital transformation in FinTech, powered by nonbank institutions, puts pressure on the economy and other limited investment firms to implement new technologies and processes with similar attributes. Banks and financial institutions are taking bold steps, such as investing heavily in customers’ services and digital client engagement, the development of in-house digital teams, and increased funding for digital transformation and innovation. A new vision of collaboration, on the other hand, is emerging as well.
Through partnering with finTech incubators, introducing their FinTech initiatives, setting up their investment funds and offering creative ways of communication and cooperation (e.g., ‘in-residence’ programs) to fintech companies, a range of leading institutions are now rethinking the way they engage with the fintech industry. Financial regulators have called attention to the growth of FinTech innovation. Therefore, considering the possibilities outlined above, advances in fintech can also build and increase a variety of transparency, private security and information processing, consumer safety, accountability, and cybersecurity risks and vulnerabilities.
For these purposes, financial technology regulation is gradually tightening. Financial regulators are now seeking to foster fintech innovations by creating an atmosphere where progress can flourish while securing markets, customers and investors at the same time.
FinTech and Security
Bank and financial regulatory frameworks are also increasingly changing as the fintech ecosystem progresses. Financial regulators are also reviewing existing laws and are proposing new legislation to be implemented to meet both the potentials and the threats of technology. In specific, a range of guidelines explicitly aimed at fintech innovation have already been or are in the course of being implemented by financial regulators in the United States, Europe, and the United Kingdom.
The transformation of banking and financial services sparked by fintech innovation has intensified a need for both comprehensive and forward reasoning in these new regulations and procedures. Thus, the legal framework and supervision are determinants for the fintech ecosystem’s growth and could affect the size and pace of its future expansion. By evaluating and comparing the fast-changing fintech legal and regulatory structures in the world, the fintech research will dig deeper into the facts at this level.
The research initiative will then explore new regulatory proposals that could promote safer pilot-type, small-scale fintech innovation and allow more efficient oversight of how to identify and resolve the risks posed by fintech innovation. Then most probably, the fintech research will reach a point by addressing measures aimed at facilitating an ongoing and more productive dialogue between the fintech industry and financial regulators, as well as a more efficient cross-border management of the supervision of fintech regulations.
I hope you enjoyed reading this article: Decades of Fintech Research Summarized in 2020
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