The last decade has seen a surge in the number of fintech players like never before and the pandemic has caused an acceleration in the industry
Since the formalisation of monetary policies centuries ago, banks have been the flag bearers of secure monetary growth and regulated financing, and the space has seen a massive evolution, from banking institutions moving from purely accepting deposits and disbursing loans, to increasing their focus on wealth management and value-added services for increased customer acquisition and retention.
However, it was no secret that the banks earned the lion’s share of the profits from deposits, but also left a large part of the society unbanked due to compliance procedures causing the public at large to have an unfriendly perception of banks.
The last decade has seen a surge in the number of fintech players like never before and the pandemic has caused an acceleration in the fintech industry due to people looking at alternate payment methods, applications or tools that give back more to the users.
Fintechs, through their technological advancement and innovation, are driving the financial, insurance and regulatory services industry aggressively to simplify user experience and accessibility. However, quite often there is a dilemma as to whether fintechs are competitors or complementary to banks and whether either one of them would emerge as a superior force at some point in the future.
A co-existent ecosystem between banks, regulators and fintechs is what would create not just a customer-friendly environment, but also a regulated interface to maintain the integrity of the highly looked upon industry. The current era is the time of instant gratification and the audience is now more aware than ever. As long as people migrate or travel, remittances and payments will continue to thrive and remain a necessity.
Of course, the mechanism, technology and time involved in making these payments would definitely improve and become almost instantaneous, but the crux of the business remains the same.
Banks and fintechs have become compulsively reliant on one another with banks providing fintechs with the statutory and regulatory framework to extend services to the customers and fintechs, on the other hand, providing banks with cutting-edge technology and access to networks for a quicker go-to-market and help to tap into newer segments.
In today’s times, almost every transaction done by a customer through a bank or exchange house could possibly have been routed through a fintech start-up empowering the bank or exchange house. Hence, both the bank or money exchange can make gains from collaborating.
Today, one just needs a smartphone and an active internet connection and they could explore a world of payment services at their fingertips, right from opening bank accounts in seconds to wiring money or making cross-border bill payments in seconds without any hassles.
As per research, the global remittance market is expected to touch the trillion-dollar mark over the next five years; India, China, Mexico, Philippines and Egypt remained the top five receiving countries with inward remittances totaling to $250bn in 2020 as per World Bank statistics.
On the other hand, the US ($68bn), UAE ($43bn) and Saudi Arabia ($35bn) were the top three sources of outward remittances posing a massive opportunity in the GCC market.
