The intersection of finance and technology means exciting changes in how we buy, sell, trade and save. Four business leaders weigh in on the ever-changing world of FinTech.
Prasanna Dhore
Chief Data and Analytics Officer at Equifax
What is the number one way technology has transformed the financial sector?
Significant changes in the financial sector have allowed companies to conduct business more efficiently at lesser costs; they can reach their customers through different channels and can provide a wide variety of services or products to a wider array of customers. The largest transformation in the financial sector has been the way in which consumers interact with their service providers. The need for a consumer to interact directly with a bank representative is decreasing. The credit industry is transforming in similar ways. Alternative data, evolving security, fraud, and authentication capabilities allow all these operations to happen with the click of a button.
In your opinion, what is the biggest obstacle that the financial technology industry is facing?
There are two ecosystems – one, the current incumbents who need to evolve and maintain their existing positions, and two, the new startups who seek to build new solutions for consumers and the FinTech industry. Established players must be nimble and quickly respond to consumer demands. To keep up with competition, many companies are investing and partnering to adopt growing technologies such as Cloud, Machine Learning, APIs and Blockchain. Startups face different challenges and need a solution that’s both unique and meets the need of real world use cases. The quality, speed and ability to scale their solution are what will cultivate winners.
What changes do you see in store for the FinTech industry 5 years down the road?
Currently evolving technologies will either mature or fall off based on how efficiently they tackle real world use cases. I see significant consolidation as major incumbents acquire smaller companies in order to expand customer offerings. Data will be democratized, giving users more control over their data. Artificial Intelligence capabilities, such as Natural Language Processing and Machine Learning will enable mundane tasks to be automated. Finally, thanks to the advancement of security management, many large organizations will be ready to adopt Cloud. As newer technologies mature and become mainstream, regulations will evolve to bring innovation to the marketplace.
Adam Stettner
CEO, Reliant Funding
What is the number one way the financial sector has changed?
Technology. It’s changed how quickly small business owners obtain the funding they need. The industry became significantly more efficient for both small business and funding providers since the financial crisis of 2008. Ultimately it comes down to the convenience of a simple application process, quick approvals and delivery of funds. Technology has helped to fill a gap that traditional banks left and have not returned to. Balancing personalized service and leveraging technology are key for providers. Technology without personalized service removes the power of relationship. This will continue to evolve in the coming years.
In your opinion, what is the biggest obstacle that the financial industry is facing?
Uncertainty. With a new administration, conflicting economic data, battles between parties and regulating bodies, there are many areas of finance and SMB funding that may be altered in the coming months/years. Getting clarity creates an environment where new programs/offers can be created. Both the end user and financial providers stand to benefit from a more defined and certain environment in which they can evolve.
What do you see in store for the financial industry 5 years down the road?
Technology evolution will enable a wider population to gain access to capital. A borrower’s criteria will continue to drive terms and conditions. Options will increase and they will identify as much more than just being a credit score.
Disruptors will continue to enter the space, creating growth/delivery method sophistication. The application process today will look radically different in 5 years. Technology and speed will become the norm rather than the novelty. Service will be a priority along with the convenience of technology as a differentiator.
Additionally, I predict consolidation among alternative funding providers, giving them a competitive edge with larger financial institutions.
Evan Singer
CEO of SmartBiz Loans
What is the number one way technology has transformed the financial sector?
Technology has added value to the customer experience in a number of ways, most recently through intelligent automation. This technology — which includes components like artificial intelligence, machine learning and natural language processing — has completely automated back-end processing (in SmartBiz Loan’s case, this means automated loan underwriting, data collection and analysis) to allow humans to focus on more value-add activities, like solving tough problems for customers. This tech also allows SmartBiz to get capital in the hands of more small business owners by matching them with the right bank likely to fund them much faster and more easily than ever before.
In your opinion, what is the biggest obstacle that the financial technology industry is facing?
The biggest obstacle the financial industry faces right now is transparency. We’ve seen various examples of this problem, from Wells Fargo to online lenders who dress up expensive loans as affordable, and trap small business owners in cycles of debt. Incentives in the small business lending ecosystem often misalign with the interests of small business owners, because more expensive loans equate to greater revenues. Lenders that deliver the capital their customers need at the lowest price, in a fast and easy way, are the ones that will win. Transparency is a key piece of this superior customer experience.
What changes do you see in store for the FinTech industry 5 years down the road?
In 5 years, we will see intelligent technology even more deeply integrated into the way financial institutions meet the needs of their customers. In small business lending, this will allow businesses like SmartBiz and our partner banks to say yes to customers more often, thereby originating more loans to more small business owners, who ultimately fuel the growth in the U.S. economy. With 23 million small businesses in the U.S., they are widely considered the backbone of our economy, so the more we can use technology to help them thrive, the healthier the overall economy will be.
Joseph Daly
Paysafe CEO of US Payment Processing
What is the number one way technology has transformed the financial industry?
The growth in e-commerce has created an unprecedented shift towards digital and alternative payment methods and mobile-initiated transactions. Demand is increasing for real-time data analytics, and the line between online and “bricks-and-mortar” commerce is becoming increasingly blurred. Companies that want to succeed in this environment need to invest in technology and services that support omnichannel experiences. Recent data compiled by Invesp suggests those that do so retain an average of 89 percent of their customers.
In your opinion, what is the biggest obstacle that the financial technology industry is facing?
One of the biggest challenges we’re seeing is in the development of technology to satisfy increasing demands for buyer convenience– such as one-click remember-me features– whilst on the other hand developing heightened security parameters to protect both consumers and businesses against fraud with dual factor authentication. We’re continuously assessing how to protect both consumers and merchants without creating friction, and this is a challenge that the whole industry is facing today.
What changes do you see in store for the FinTech industry 5 years down the road?
The digitization of commerce will continue to shift financial consumption habits from traditional payment formats to new, digitally-enabled platforms and mechanisms. This shift will demand new capabilities, new technologies and new thinking from the FinTech industry. E-commerce and cross-border commerce and remittance will be key areas of growth and opportunity globally, while the challenge will be to deliver this against a backdrop of significant global regulatory change.