Article by Stéphane Paulus, Project Manager at Solvay FinTech Marketing Hub

Financial Technology is an industry composed of companies using new technology and innovation to leverage available resources in order to compete with traditional financial institutions in the delivery of financial services.

Fintech consist of startups (and also established financial and technology companies) trying to replace or enhance the usage of financial services. They are active in the banking sector but also in the insurance sector where companies are often more named InsurTech. These startups are applying new business models and technologies to disrupt and reshape the financial services industry such as mobile payments, money transfers, loans, fund raising, making it easier to do business and lower costs.

Fintech firms can pass on huge savings as they are far more agile than traditional banks, not having the same overheads and commitments. Their relative lack of size allows them to innovate and adapt in a very fast way. These startups are facing challenges such as data security which is an issue regulators are concerned about because of hacking threat as well as the need to protect sensitive consumer and corporate financial data.

Marketing is another challenge for most Fintech companies as they are often outspent by larger competitors.

The market in Europe represented $1.5 billion in 2014 and it is still growing fast! At the moment, 86 FinTech companies are active in Belgium 86 FinTech of which 42 are in Brussels and 12 in Wallonia.

FinTech solutions are based on the fact that customer behavior massively changed with the rise of smartphone. An “always online” culture showed up with the proliferation of services and apps feeding it. People expected handling financial affairs as easily as email or Facebook or turning a mobile phone into a point of sales system giving the chance to handle payments.

Beside large, well-established financial institutions such as ING, BNP Paribas, Belfius,….we find big technology companies active in financial services but not exclusively (Apple, Google, Facebook, Twitter…), companies providing infrastructure or technology facilitating financial services transactions (MasterCard, Fiserv, First Data, ISABEL, ..) but also disruptors that are fast-moving companies, often startups, focused on a particular innovative technology or financial process.

All of the bank’s businesses are impacted: account opening (Nickel account,…), payments with digital wallets, peer-to-peer payments, money transfers across borders (Apple Pay, Stripe,… ), transfer and currency exchange (Transfer Wise, …), infrastructures (Blockchain), credits and capital requirements, equity crowdfunding and peer-to-peer lending (Look & Fin, Edebex, Zopa,…), discretionary management and wealth management (Nutmeg, Betterment, Easyvest,…),  big data analytics and predictive modeling , data management (Data.be,…)

Sources