What exactly is meant by a FinTech anyway?
The interplay of financial services and modern technology is creating new innovative business models that are digitizing the way financial business is conducted. FinTechs can focus on different areas such as payment, investment or financing. Especially in recent years, the numerous fintech startups have become increasingly popular and there are more and more providers on the market.
But which FinTechs are there and what can they do?
On the one hand, web-based payment systems via app or the further development of card payments can simplify everyday business life. An example of this are the providers Sumup or iZettle.
Another area is alternative lending, i.e. financing solutions that are independent of traditional bank loans. Fulfin provides flexible loans, a fast, uncomplicated application process and an innovative collateral model to ensure liquidity for companies that want to avoid the lengthy and complicated process of applying for a loan from a bank.
Future trends in the financial industry
The further development of artificial intelligence and the improvement of algorithms plays a major role in the FinTech industry. The ongoing automation and digitalisation of processes can further accelerate and optimise work processes. Large data sets can then be evaluated using Deep Learning, which automates processes. Especially in Germany and Europe, a significant expansion can be expected in this area in the coming years and decades, as the FinTech industry is still lagging behind significantly in this area in contrast to other countries.
The current COVID-19 situation is proving to be a driver of digital solutions, including in the financial industry. E-commerce is enjoying ever greater popularity, which is why the call for appropriate financing solutions is becoming louder and louder. In addition, the demand for digital payment methods and mobile banking offers is increasing. The FinTech market is very positive about future developments and can therefore also see the current situation as an opportunity.
Banks have also recognized the need to digitize business processes and the line between FinTech and bank is becoming increasingly blurred. Traditional financial service providers are learning from FinTech business models and have recognized the advantage of cooperation.
Cooperation between traditional banks and FinTech companies
Within the last few years, a completely new trend has emerged. Traditional banking institutions and FinTech providers are combining their strengths and relying on a joint business model. The basic idea behind this is quite simple: Banks grant FinTech companies access to private and corporate customers and offer support with complex regulatory processes, while in return they receive access to the innovative technologies of the Fintechs. Through the coopetition, both sides of the company benefit and the customer can be provided with even better financing solutions.
To demonstrate the whole thing with a concrete example and to show how the strengths can be optimally coupled, the analysis of the Cooperation between fulfin and Penta:
Penta is a digital banking provider that offers, among other things, a free business account for startups. Penta focuses on an easy-to-use user interface and collaboration with external service providers and fintech apps to create added value for the customer. By offering simple business banking for SMEs with individual company cards and a flexible online business account, the company focuses on the needs and wishes of companies in various stages of growth.
Fulfin, on the other hand, offers financing solutions specifically for online retailers and plays an important role in improving the liquidity supply of digital businesses. As a bank-independent finance partner, fulfin offers tailored financing for e-commerce merchants as well as flexible repayments that fit the respective business. Fulfin is the partner for inventory financing so that online sellers can increase growth quickly and sustainably.
Through the cooperation of both companies and the mutual support, the processes of SMEs are optimized and the liquidity supply is ensured. The result is a holistic digital offering, from corporate financing and bank account management to support for growth.
In any case, one can be curious about what the financial industry in Germany and Europe has in store for the next few years and what role alternative lending providers and the like will play in the future. The potential of the technologies and automations is in any case huge and will also be a topic that will be dealt with extensively in the coming years and decades.