What is FinTech
FinTech” describes a sector that uses innovative technology solutions to improve, automate and deliver financial services. Financial technology has been around for several decades but these days it not only refers to the technology being used in the financial industry but also to companies like PayPal and Valyuz who focus on providing financial services and products using FinTech.

FinTech has been around a while so why is it in the headlines now?
Following the financial crisis of 2008 banks were more cautious about lending; interest rates plummeted and transferring money remained a slow and expensive process. Despite this there was still no alternative to traditional banking and so banks maintained their monopoly on the financial industry.
With the introduction of new technology and the ever increasing use of Smartphones things began to change. The Internet changed the way we live and the way we make payments, purchases and transfer funds. Today we can hardly imagine a time when the world was not at our finger tips. Those in the financial industry who noticed the change in society and the reliance on connected devices took advantage of this but many incumbents providing traditional financial services were slow to implement digitalization.
Much has changed in the world of banking since the financial crisis. There have been countless innovations and changes in regulations. The Open Banking initiative and PSD2 are just two examples of how new regulations have created an opportunity for new comers to the financial ecosystem. The dissatisfaction customers felt with traditional banks; the advent of Smartphones and our reliance on connected devices; innovative technology and the change in regulations have all contributed to creating the perfect ground for FinTech to grow and be a current hot topic.

The Importance of FinTech
When a market is more competitive it is always better for the customer and for the development of the industry. That is what FinTech has done for finance; it has given it a surge of energy and accelerated banking into the future.

  • Payments – One of the areas affected by FinTech are payments where competition has driven transaction fees down; FX commission down and dramatically speeded up the payments process.
  • Accounts – Accounts (private accounts and business bank account) are another area affected by FinTech. With the digitization of bank accounts FinTech companies and challenger banks can now offer clients easy access to international banking services for a fraction of the price. Now even the unbanked or underbanked have access to financial services where as their application for a current account would have previously been rejected by traditional banks.
  • Lending – We now have FinTech lending platforms that can now offer better terms than ever before. These alternative financing solutions have lower interest rates, lower fees and often flexible repayment options for both businesses and individuals. Customers who have previously been turned down by banks when seeking loans now have an alternative.


Is FinTech the solution to all Financial Services?
FinTechs still rely heavily on their relationship with traditional banks who often act as a payment platform or transfer intermediator. Using an established bank as an intermediary is often economical and time-saving. Doing away with the legacy of traditional banking infrastructure may take time. It remains to be seen how long FinTech companies and traditional banks will still need each other.

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