How Fintech companies are changing the Financial Landscape?

We all can see that the financial industry is going through a transformation especially in the banking sector. The key initiators behind this transformation are the fintech companies. Fintech companies will slowly and gradually revolutionize the way we bank. This revolution will have a significant impact on financial centers but the biggest impact will be on the people working there. The bankers of the future will be very different from the bankers of today with different personalities, backgrounds, and skillsets.

To understand the changes that fintech companies are bringing, we need to first understand what is a fintech company


Fintech is the abbreviation of financial technology. Fintech companies integrate advanced technology with traditional banking to bring innovation in the design and delivery of financial services. There is a huge gap that has been created between the services and offerings provided by the banking sector and the expectation of the customers in terms of user experience and perception. This is the gap which the fintech industry is trying to bridge. They are changing the financial landscape by making it safer, faster, and engaging.


Because of the technological advancements and the changing needs of the customers, it may so happen that the financial partners in the future are not going to be the traditional banks but the technology firms. For instance, peer-to-peer lending platforms are offering consumers an alternative for loans that were previously available mainly at banks. Robo advisory platforms offer consumers asset management solutions that are not only transparent about what they charge you but are also substantially cheaper.

Banks these days worry less about the competing banks and more about the challengers like fintech companies and technology firms who are new entrants in the financial space and have the liberty to pick and choose the segments they want to get involved in, segments that are certainly profitable. It is very unlikely that a fintech start-up would want to take up deposits or the vault where all the assets are held. They are very happy to tackle the front end.e., the consumer interface and leave the tedious and monotonous back end to the traditional banks, like post-date settlement, reconciliation, or regulatory reporting. This trend might create a new banking model in the future where traditional banks will handle the backend and become commodity utility providers to the technology firms and fintech providers will control the front-end customer experience.


The fintech industry is continuously transforming the way financial services are being delivered and consumers will be some of the biggest beneficiaries not only from the user experience perspective but also in terms of access and cost savings. Fintech companies are using differentiated products like free credit scores, high yield savings accounts, free brokerage, cryptocurrency accounts, peer to peer-to-peer payments accounts to achieve economies of scale, to provide higher efficiency and speed that has never been seen before.

Banks have also realized that the landscape is changing and in order to survive, they need to change and evolve. Some banks will succeed in this evolution and are able to embed this culture of innovation and technological advancements while others might fall behind.

To provide more value to the customers, fintech companies focus on the following parameters-

  1. Innovation in their offerings
  2. Better user experience
  3. Use of tech to create a safe system
  4. Enhanced efficiency and effectiveness
  5. Selecting niche segments to operate in
  6. Quick response and problem solving


Despite a growing market, many banks continue to lose clients and revenue due to inefficient and outdated systems that are costly to maintain and don’t provide the best borrower experience. To cater to these ever-changing requirements of the customer, the banks of the future will have to be changed. The 3major factors that are shaping the future are-

1. Going online from offline-More and more consumers want to take the digital route for most of their financial needs and especially since the COVID-19 pandemic.

According to BCG’s Global Retail Banking Report 2021, customers are moving to digital channels faster than they have in the past. Online banking use has risen by 23%, and mobile banking use is up by 30%. These changes are likely to be permanent, accelerating the migration to digital channels by three to four years over pre-crisis trends.

As per the survey, an average of 13% of respondents in 16 major markets used online banking for the first time during the pandemic (12% for mobile)—and in some markets, the percentage is substantially higher. Cashless payments are also receiving a major boost during the crisis. More than 20% of respondents told us that they have increased their use of digital payment solutions, such as those provided by internet banking and third-party apps, and more than 10% said the same about credit and debit cards.

2. Trust on technology-Consumers trust towards digital platforms has manifolded and they prefer to choose technological companies for their financial needs.

In US and UK, consumers ranked PayPal and Amazon nearly as high as banks for trust with their money, in Bain & Company’s survey of 133,171 banking customers in 22 countries.

3. Personalization-Personalization and easy access to tailored products will play a major role for customers in deciding the type of banking they would pursue.

According to Salesforce, an overwhelming majority of marketers (99%) believed that personalization has at least some impact on advancing customer relationships, while almost 8 in 10 (78%) believed it has a “strong” or “extremely strong” impact.

As per the Trends in Financial Services Report of 2020 by Salesforce Research-

All these changes are leading to a massive industry shift and a rise in deals made across the globe. New financial platforms and emerging fintech companies are scaling rapidly and have started competing with some of the biggest traditional banks of the world.

To step into and stay ahead in this new financial landscape, banks are going after technology platforms to add to their product capabilities and to add to their overall experiences for delivering to their customers today. They are finding ways to collaborate with the fintech companies and are working on providing a high level of service, ease of operations, and a seamless customer experience.

Moving towards Baas

According to Deloitte Digital Report 2021-Banking-as-a-Service-Explained, Banking as a Service (BaaS) is reconfiguring the banking value chain by enabling third-party distributors to offer banking products and services. Banks in particular are integrating fintech or other financial service vendor products into the banking journey, while non-financial companies are embedding banking products into their own services.

The report also speaks about how banks can establish the Baas Ecosystemthrough 4 primary configurations.
1. Provider-Only-Provide banking license, products, operations, and/or technology for use by aggregators, other banks, and NFCs. Key product lines include deposits, loans, and payments.

2. Provider-Aggregator-Provide banking license, and products, operations, and/or technology for use by other banks and NFCs. Couple their own capabilities with other vendors to compose a complete ‘out-of-the-box’ solution for distributors.

3. Distributor-Aggregator-Leverage end-customer relationships and existing own brand to offer unique financial services propositions. Create optionality for customers and/or enable novel features by adding new products or technology from multiple providers.

4. Distributor-Only-Leverage end-customer relationships to offer unique financial services propositions, provided largely ‘out-of-the-box’ by third parties. Propositions enabled can be tailored to serve either new (e.g., neo bank) or existing (e.g., traditional retailer) customers bases.

The future of banking is high tech-driven and customer-oriented. And an amalgamation of traditional banks and new-age fintech companies will pave the way to the future.

Automation in Lending

In recent times, the banking world has gone through a series of transformations and has been re-defined by technology. Digitization, digitalization, and data analytics have changed the face of banking worldwide. However, technology can be both a challenger and an enabler and the question is how is the banking system adopting and adapting to this change? To what extent are banks leveraging technologies like machine learning, Artificial Intelligence, and big data to get a competitive advantage?

Or is Fintech now a hygiene requirement for financial institutions?

The banking industry was the first one to adopt automation in fraud analytics, credit underwriting, and customer personalization. Today, nearly50% of the personal loan portfolio is managed through digital technologies. In the backend, there is a machine learning algorithm that is underwriting loans to speed up the processing, doing fraud analytics as well as making offers to customers in real-time.

In banking and securities, robotic process automation (“RPA”) is already widely used to automate workflow and decision-making for a variety of rules-based core processes, such as loan origination and collections. As the technologies mature, many firms are expanding their use of automation and cognitive intelligence (“CI”) to drive efficiency, effectiveness, and productivity throughout the enterprise.

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Automation Potential in Banking and Finance
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  • According to a recent report published by Fortune Business Insights, the globalrobotic process automation market size is projected to reach USD 6.81 billion by the end of 2026. Leading analysts also estimate a dramatic increase in the market size of RPA technology.
  • As per Gartner, the market size for RPA solutions is estimated to reach $2.4 billion by the year 2022.
  • As per Forrester’s RPA trends and forecasts, the market for robots in knowledge-work processes will reach $2.9 billion by 2021.

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Therefore, the change is real and is happening at lightningspeed. But it is not just the back-end that is changing. Firms are now seeing technology as a USP to win over consumers. Convenience isking and time is money. And Fintech allows banks to master both.


Banks are benefitting from the use of machine learning not just in terms of quick operational decision-making but also in improving customer engagement.With the use of AI, banks can transform the entire customer journey.Embedding dataas a part of thecustomer journey and using the right data sources andelements of machine learning or AIprovides multiple benefits like-

  • Portfolio Management
  • Easy audit and compliance
  • Easy accessibility of information and documents
  • Smooth integration across platforms
  • Security compliance
  • Enhancedcustomer experience

A360-degree transformation is being noticed in the banking, lending domain.Studying customer behaviorand transactional patterns is helping in understanding loan requirements better and in taking smarter lending decisions. Banks can seek information onthe transactional flow from internet banking and decide proactively whether to make that lending available to SME clientsor not.

In United States, it takes approx. 50 to 53 days to process mortgage loan. Process of approving mortgage loan goes through various checks like credit checks, repayment history, employment verification and inspection. A minor error can slow down the process. As the process is based on specific set of rules and check, RPA can accelerate the process and clear the bottleneck to reduce the processing time to minutes from days.
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According to Bain & Company, determining the best way to integrate smart automation technologies such as RPA and AI in a way that effectively promotes customer loyalty, operational success, and employee satisfaction is a balancing act. A mature solution will address the distribution and combination of attended and unattended processes, as well as RPA systems augmented by AI tools.
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The amount of data being generated from day-to-daybanking operationsby millions of customers and the already available historical data iscollectively beingutilized to create new offerings. This isachieved through arrangement, management and ingestion ofthisdata to a commonsystemwhere it isstored and thoroughly analyzed. This then helps in building next generation data platforms to scale up the analytics insight based on the organized data.

In this digital era, speed is a very important element. Accurate data analytics with supervised machine learning will help banks reduce cost of operation and help in upsellingand cross sellingof products significantly. The keyis to get the data right andscale up withAI capability.It is not only about the quantum of data; it is also about thequality of data and itsaccessibility. The focus is to improve the quality of legacy data and leverage information available through public utilities to take decisions. Banks need to leverage language and voice bots to service customers along with keeping in mind the security considerations as hybrid cloud is being used to manage and access data.


Activities like advanced threat hunting exercise,increase the costs involved in automation. However, this can easily be compensated when the cost involved in building and maintaining technology are monetizedwith optimum utilization of data. There is littleuse of advanced infrastructure and security system if value added benefits are not observed in the long run. At the end of the day,how efficiently the dataisbeing used is of utmost importance. We need to leverage the data usage in such a fashion that it will be advantageous for the organization as well as the customers. Automation helps in eliminating redundancy and allows for efficient utilization of the workforce which in turn leads to both cost and time savings.

Research shows that implementing RPA drives about 25% to 50% cost savings, improving the output metrics of applied functions.
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To makecustomers believeinbanksastheir safefinancial partners, financial institutionsneed to invest in internal process improvement, new technological solution to prevent crime and also to educatecustomers. Wheneverprocesses are fully digitized, and modern technologylike AI and machine learning areused along with appropriate dataaccuracy,operational risk will automatically be reduced. Moreover,AI can help scan abnormal behavior of users and identify a pattern, which also reduces organizational risk.

However,investment in technology alone will not make a safer financial partnership with customers. Investment in peopleand culture is equally importantin providing customers a safer platform. With increased number of customers,there is an increase in thedigital footprint being left behind and itcan be leveraged to build a robust and more efficient system.

Advanced data and analytics with robust cyber security to maintain operational riskisthe key tobuilding a cognitive enterprise. With optimum utilization of Artificial Intelligence and Machine Learning, automation can be scaled up throughout variousprocesses, while reducing costs, ensuring adherence to industry standards and norms and tying everything together to improve delivery services and customer engagement.