Debunking The Most Common Myths Around Fintech
The size of the fintech market will soon reach unprecedented heights, but this area is still surrounded by many myths. For example, fintech companies are unreliable and their audience is exclusively millennials. Perceiving fintech in this way means underestimating the market and depriving investors of impressive profits.
Let’s figure out what myths reign in the market, and most importantly, debunk them.
“Banks will die or disappear due to fintech”
In fact, technology only changes the way customers interact with companies, but people will still need to either deposit money or take out a loan. And it is banks that are best suited to deal with these tasks. At the same time, it is no secret that most banks want to become major IT players in the market and ecosystem giants, investing huge amounts of money in this area. Therefore, everything that is done now in banks is aimed at increasing lifetime value – the amount that the client will bring to the company for the entire period of using its products.
“This is an incomprehensible area, fintech specialists will definitely deceive me and block my account”
Clients still have a distrust of banking and finance, also due to the legacy of hidden interest in loans. Moreover, for a long time, financial products themselves were not always clear and transparent to end users. Often this was due to a gap between the product front and back, which made it difficult to create a seamless customer experience. Now banks are working on conveying information so that the audience doesn’t have difficulties in recognizing the essence of products and services.
Also, the Central Bank obliges banks to comply with the requirements of the law, because no one wants to put a banking license at risk. Blocking of accounts is a procedure unfavorable for banks.
“Neobank is only for millennials”
The most popular myth is that fintech companies only target a young audience that actively uses digital services. This is a really important segment for fintech. But perceiving it as a toy for millennials is to underestimate the market.
In fact, financial software development is aimed at an audience of all ages. In Europe and the US, fintech companies have clients of all ages, backgrounds and professions, including high-net-worth individuals who want an efficient service.
“Regulation of the sphere will still suppress innovation”
The recent global financial crisis highlighted the need for regulation of the financial sector. However, upon careful examination of some of the incidents, it became clear that many of the most serious offenders were simply ignoring the rules already in place. In most cases, banking and financial regulation rarely holds back innovation. The hallmark of fintech companies is their transparency. Fintech technologies are not only developed on platforms that comply with regulatory requirements, but also have the flexibility to easily and quickly make changes to meet new requirements.
“Fintech is exclusively about lending and payments”
Well, a significant part of investments in the fintech industry, about 80%, was in loans and payments. But the future of fintech spans the entire spectrum of financial services. Investment management, marketing support and insurance are key growth areas. The financial technologies involved in the insurance sector have revolutionized a previously dying industry. Fintech’s ability to provide sophisticated data analytics is another area of general interest.
“Fintech solutions are easier to hack”
The industry experts are doing everything possible to ensure that information leakage is not “possible”, but only “probable”. There is no doubt that any new technology is vulnerable to cyber attacks, but fintech companies are no more susceptible to these threats than any other sector. Recent SWIFT attacks and credit card data breaches in the US suggest that even long-established institutions can be vulnerable. Fintech companies are subject to the same regulatory rules as traditional financial services companies, so they often use security verification and identity verification, which increases the level of reliability of technologies.
The field of financial technologies is developing rapidly, which means that the number of services in fintech is increasing every year. Perhaps the number of myths will also increase, which is why it is crucial to develop your financial literacy. This article is a start!