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Fintech Models and Trends in 2019 You Should Know

by icosuccess

Fintech, the combination of two words – “finance” and “technology” is the fusion of the two worlds to derive a single infrastructure where financial services are driven by technology. The union of these two worlds has led to a disruption in the financial markets which is evolving at an impressive pace.
As reported by McKinsey Panorama, virtually 80 percent of financial institutions have, either as investors or shareholders, entered into strategic partnerships with fintech start-ups. As of last year, global venture capital investments in fintech were totaled to be about $30.8 billion – which is over 1600% increase from $1.8 billion in 2011. Statistics also show that startups in Asia account for twice the global average deal size due to a large number of fintech deals sealed.
Four Variants of Fintech Models in 2019

  • Tech Startup Model: These firms look to develop business models that emulate the conventional banking system, usually focusing on a particular niche. More often than not, the challenge faced by this kind of firm is the cost incurred during customer acquisition.
  • Technology Investor Model: In this case, financial institutions are constantly investing in technology seeking ways to improve efficiency, performance, and security. In the long run, they aim to achieve investment and partnerships from other institutions like them.
  • Tech Ecosystem Model: Technology often thrives when there’s an ecosystem backing it up and this is evident in the support provided by financial services to existing platforms in order to monetize the relationships and user data possessed by either party. By utilizing this model, firms often face little or no challenges with customer acquisition as against other models.
  • Infrastructure Model: Tech firms, in this case, work independently of financial institutions but sell the products and services developed by them to these institutions to enable them to digitize their operations in order to improve customer experience and risk management.

What the future holds for the models listed above is obviously different and all of them will face different hurdles. For infrastructural models, technical or product capabilities will pose great challenges while startups will generally face challenges with customer acquisition.
In the case of the tech investor model, transitioning from the traditional mode of operation to a digitized form will be a challenge especially with regulations and policies. The ecosystem model, on the other hand, will face challenges relating to policies especially concerning disruption and change in the traditional way of doing things.
Top 3 Fintech Trends in 2019
All these models employ the latest technological trends relating to finance and detailed below are some of these trends that one might be familiar with:

  • Disruptive Payment Technologies: The world is fast moving away from handling paper money everywhere we go to the digitized transfer of funds for the payment of goods and services rendered daily. Cryptocurrency, which seems to be the major drive in changes exhibited in payment systems has been able to induce a change in paradigm relating to payment solutions, enabling institutions to make use of external payment providers as opposed to regular banking institutions.
  • Platform as a Service: One of the trends making a boost in 2019 is Platform as a Service (PaaS) which is expected to exhibit performances beyond conventional cloud computing which has helped ease developers’ work by a large margin. Now, PaaS have more responsibilities which include but are not limited to team collaboration, resource management and provision of tools to streamline development. This way, companies will be able to have a speedy project launch, agile approach to operations, have standardized database management and middleware facilities, etc.
  • Blockchain Technology: It is no news that this technology is poised at making the financial world a better place for all. However, due to regulatory constraints in a number of countries, this technology is yet to achieve a bulk of its potential. Asian companies do not have as many strict regulations on cryptocurrencies and blockchainrelated operations hence they have begun unveiling the capabilities of this technology.

The importance of using a VPN while conducting mobile transactions (privacy and security made possible by traffic encryption) cannot be underestimated. However, with the use of blockchain and its secure network, VPN might not be necessary for secure payments in the nearest future.
With the advancement of technology and its role in virtually every sphere of life, it is pertinent for industrialists and financial stakeholders to start making moves to change their corporate strategies to fit into any one of the above-listed fintech models in order for their business to move at the pace the fintech industry is going.

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