On the global start-up scene, the development of financial technology is one of the hottest topics. Now, banks can profit from innovative ideas
How are FinTechs affecting the bank industry? This was one of the main topics at the Digital-Life-Design (DLD) conference in Munich. On Tuesday this week, Wirecard CEO Dr Markus Braun took part in a discussion with Jeff Steward, Founder and CEO of Lenddo, and Christian Angermayer, Apeiron Investment Group, focussing on how the digital revolution has created new possibilities when it comes to payment models and financial services. The panel was moderated by Harry Nelis from Accel Partners.
They all agreed on one key point: as the number of mobile phones continues to rise, the challenge for both FinTechs and banks today is to combine internet technology with banking services. Nevertheless, the question remains: what is the new buzz word “FinTech”? Or rather, why is everybody discussing the subject of FinTechs at the moment? Companies like Wirecard are proof that FinTechs have already been around for more than ten years. As a company for payment processing across all sales channels and financial technology, Wirecard is one of the greatest success stories of this movement. Its USP is its combination of software technology and banking services, as Wirecard also has banking licences.
Dr Braun underlined that the big difference today is the fast rise of mobile phones and internet technology, which has rapidly changed the structure of finance and banking. Today, people can transfer money via their mobile phones in real time and have their finances safely in hand at any time. That brings many advantages for consumers and also providers.
In the future, Financial technology will be a part of everyday life
In the future, financial technology will be a part of everyday life. If banks change their focus to be more internet-based, the latest technology can represent a real opportunity for new business models. The aim in this respect is to sell products and services through the internet and offer mobile apps.
This situation has changed the way banks think about their market, as they now have different competitors all around the world. Their challenge today is to gain the trust of their customers. To fully achieve this, banks need to be open-minded and understand the new lifestyle which is currently influencing the whole FinTech industry. They should examine this movement as the technical transformation influences their whole value chain.
Europe is very advanced in FinTech due to standardised regulations
However, some FinTechs should also rethink their business models, because if they offer a lot of services for free, for example, it is not easy to introduce fees at a later date. They should therefore think more about how to gain earnings in the future. Another critical point for FinTechs are regulations. For entrepreneurs, it is very important (and necessary) to fulfil all legal requirements before starting a business. Sophisticated companies like Wirecard can help them deal with any regulatory requirements. Dr Braun recommended that FinTechs should focus their own efforts on the frontend and then cooperate with companies who specialise in the backend.
When companies are familiar with the standards, regulations in Europe can be particularly valuable in facilitating the working process. Once FinTechs deliver the input, they can act in many European countries at the same time. This shows that Europe is very advanced in all matters related to FinTech, because it is not a national issue like it is in other parts of the world.
The FinTech development brings chances to all market players
In conclusion, it can be said that the development of FinTech creates a lot of opportunities for all market players. Banks can benefit if they identify their customers and understand their needs. Small FinTechs can become profitable if they carefully consider their long-term business model and understand the markets in which they operate. For example, consumers in emerging markets have totally different needs to those in developed countries on account of their financial circumstances.
For consumers, the fact that companies all around the globe want to make their lives easier is a positive advancement. To be able to see what is going on in your bank account in real time on the mobile phone display is a truly beneficial service for everybody.