The word “fintech” has become somewhat of a buzzword especially in the financial and banking industry, and many are talking about the technological disruption that it's causing. Before we dive into how fintech is disrupting Asia and the financial industry, let’s first talk about what it is.
Fintech or financial technology is the use of modern technology to design and deliver financial services. This can be through software, block chain or technology of any form.
Working in the central district of Hong Kong, many have seen or perhaps experienced for themselves the line up at the banks that start from early in the morning. With the rise of technology and its ease of use, consumers no longer have the time or patience to wait around in long lines at the bank, therein lies the market for fintech.
How Is Fintech Different from Other Tech?
In truth, fintech is not all that different from other technology, so why is everyone so excited about fintech and what makes it such an exciting business opportunity?
According to Henri Arslanian, Fintech and Crypto Leader at PwC as well as Chairman at the Fintech Association of Hong Kong, the revolution and disruption in fintech is happening now due to the financial crisis that took place back in 2008.
Historically, big financial corporations and banks were relatively good at keeping up with new technologies and integrating technology into their products and services. However, with the financial crisis in 2008, these major banks and corporations were more focused on dealing with the fines and new regulations that were imposed on them.
This created a gap in the industry as innovation and finding new ways to serve the customer became a distant priority for traditional banks. Yet, it was also around this time when the most innovative technologies and concepts arouse, think iPhone, Kickstarter, Airbnb, Spotify, Uber, and so many more companies and services we use today which came about in 2008-2009, revolutionising consumers perspective and expectations.
Fintech, An Opportunity That Will Not Wait
A key reason why we are seeing so many startup companies jump into the fintech scene is because it’s relatively easy to do so with considerable success. Our reasoning?
Due to the rapidly growing interest venture capitals place on fintech startups and also with the growing incidence of incumbent giants purchasing startups, the returns of starting a fintech startup are more tangible. Of course that is not to say it’s without challenges, just that the returns are more evident and readily available.
Image Source: Bloomberg
Another reason startups would want to enter into fintech is because the opportunity for success is quite high. Thanks to the agile structure of startups, they are able to adopt a more product-specific strategy, giving them a real competitive edge over larger more cumbersome corporations in the race.
Through technology and automation, fintech also enables companies to manage more accounts with less, making it a lucrative industry to be in, with growing demands from companies looking to improve productively and manage processes more efficiently i.e. hence, an enticing opportunity for startups.
With many new contenders entering into the financial scene, they are able to innovate and offer customers alternatives to traditional banking and financial services. Many customers buy into the new services and platforms, both as a way to more conveniently manage their finances and as a way to retaliate against the traditional banking system.
At a time where the barrier of entry is still relatively low, many are seizing the opportunity to build a name and take a bite out of the fintech industry. However, we’re already seeing traditional banks take a more proactive approach towards fintech, investing heavily to stay in the game.
As the technology and customer’s expectations continue to progress, traditional banks and other businesses will be forced to re-evaluate their strategy in order to stay in business. The key lies in whether traditional banks and businesses with its age old infrastructure will be able to keep up with the pace of its competitors.
What Does This Mean for Businesses?
To stay in the game, businesses will need to start focusing on properly meeting customer demands and expectations before it’s too late. In China where adoption rate of fintech is highest among the world, we see that the opportunity to make it big in fintech is quickly closing up, especially with digital giants like Alibaba and Tencent.
Image source: EY
While banking is where we're seeing the most disruption by fintech, that is not to say that other companies are safe from the technology revolution. To stay in the game, companies will need to start integrating technology into their DNA before it’s too late.
This means major organisations and especially banks will have to take an innovative approach that starts from the inside out. Instead of the patchwork digitisation companies have traditionally taken, for businesses to take hold of the opportunity created through fintech, they will have to have an attitude that approaches innovation and technology from a strategic level.
The challenge here is that in the short run it will be a lot more demanding of the business and its people than if they continued making just admissible changes, but the reward is a more holistic and agile business structure with the ability to move with the demands of the consumer.
Interested in learning more about fintech? We recently hosted a fintech workshop over in Singapore with Dan Gardner, CFO of DT One. We'll be hosting a similar event in Hong Kong this June as well as other events, so make sure to follow us on LinkedIn and Facebook as well as subscribe to our blog for our latest updates.
- Fintech x Wine Tasting Event
- Hong Kong - June (TBC)
- Vietnam Payroll, Labour Law and Compliance Workshop 2019
- Singapore - May 15
- Hong Kong - May 17
Be vigilant towards the market expectations and demands
At the end of the day, be it technology, your product, service, or anything else, it is important that businesses know their market and its demands. The opportunity created in fintech was one that resulted from an oversight that banks had towards the quickly developing market, many of which are now struggling to play catch up.
With technology and users expectation ever evolving and on the move, it is vital that businesses take a more proactive approach towards learning the needs and demands of the market as a way to secure their position.
Simplifying processes and focusing on delivering results
In this age of technology and innovation, it is crucial that businesses dedicate themselves to making their companies lean and agile, learning from many startups with their unbeatable determination that’s unafraid of small fails.
To do this, major corporations need to be willing to offload secondary responsibilities by outsourcing tedious tasks to professional service providers. Links International is a professional HR outsourcing company with 20 years of HR experience in Asia, we’ve helped support numerous corporations through our payroll, recruitment, visa application, and secondment PEO/ EOR services, simplifying HR for businesses across Asia.
Inject innovation and technology at the core of your strategy
It’s an exciting time for the fintech industry with buzzwords like block chain, crypto-currency, AI, IoT and more. However in this age of technology disruption, it will take an attitude that goes beyond the throwing of buzzwords but an actual change in the way businesses approach their day to day processes. To stay in the game, companies will need to carefully examine their current approach and inject a mindset of digital innovation at the core of their strategy.
Links International is an industry leader in innovative HR outsourcing with services such as payroll outsourcing, visa application, Employer of Record (EOR), recruitment and more! Contact us for more information on how we can help leverage your HR function.