Innovations in technology have changed the landscape for many industries over the last few decades. One only has to look at the developments at IBM who in 1956 sold their very first hard drive, a five megabyte monstrosity that filled a room. The RAMAC 305 was developed to simplify and automate accounting in businesses, just one use case of the new technology making people’s lives simpler.
Hospitals, high street retailers and banks have experienced a shift in the way emerging technology has changed the way they operate. From peer-to-peer lenders to wearable payments, technology has shaped the way consumers adopt new technology to also make their lives easier. This shift has signalled a revolution in the way financial services need to think about how they respond to these developments.
Financial services have been rocked by the developments in FinTech as technology companies use their expertise to develop new services to complement the busy lives of their consumers. Most of these new FinTech companies are coming from countries that have a vested interest in developing new technology. Two of these countries leading the race are Switzerland and India. For some, Switzerland is the innovation capital of the world. It is famed for its strong economy and being the driving force behind the legitimisation of cryptocurrency.
India on the other hand, is also shaping up to become a world leader in FinTech developments. It excels at building strong FinTech technology because of the economic landscape of its citizens. Many of them don’t have access to banking services but are digitally connected to some degree through smartphones and other mobile devices. India is going through a process of digitisation, to afford its citizens basic amenities and governmental services, something that FinTech companies are following with intent.
What about countries that are already fully ingrained in the digital landscape? The Governor of the Bank of England, said that he wants London to become the FinTech capital of the world. Thankfully, London has the technical capabilities to excel in this role and as the financial capital of the world the incentives are also there for them to progress.
The City can learn a lot from Indian technology companies, particularly the ones that are innovating in FinTech. The cultural, economic and political forces within the state are pushing Indian technology companies to innovate. This is to, preferably, improve the lives of one billion citizens, allowing them to connect with each other and bank more easily.
India does well in terms of innovation because so many of its citizens are entrepreneurial in nature. Many take a frugal stance to creating innovations - young and old, everyone has the opportunity to push themselves to be at the forefront of developing new technologies. By coding, building and inventing on an extremely small budget and through perseverance, this makes a success of their ventures. As one of the birthplaces of modern mathematics, India has shown its capability in logic and reasoning, displaying its forward thinking nature.
FinTech is a big proponent of the innovational push in India. Almost 60 per cent of Indians are unbanked, meaning that they need different methods to take control of their economic independence. Yet 80 per cent of Indians own mobile phones, which has shaped the landscape for financial inclusion. By the digitisation and mobilisation of banking for individuals in rural areas, FinTech has also revolutionised the lives of those in the inner city areas.
Successful technology companies, particularly FinTech, will be the ones that can demonstrate and deliver world-class customer experience throughout the entire product innovation process. Banks are well placed to establish themselves as leaders in the push to innovate for the benefit of the consumer. Considering all the consumer data the banks possess and their capabilities to analyse and determine preferences, it is obvious they would make significant advances if they stick to the path of innovation.
There are some challenging times ahead for technology companies, particularly those who have been through large funding rounds. The “Tech Winter” as it is called, is affecting recently established companies looking to take advantage of the tech stock boom but, like the dot com crash, things are not looking too bright right now. This does not mean innovation will stop but companies will have to think long and hard about their longevity within the industry they operate.
FinTech companies will be in the thick of innovation as they try to revolutionise banking systems. Indian companies have shown world-class technology can be built without a lot of venture capital. By focusing technology on delivering customer experience, UK companies can catch up with the rest of the world and possibly take the lead.
Max Speur, COO, SunTec