The Rise of Fintech and Banking Disruption

Speed Wins

In a recent roundup of predictions for banking technology in 2013 the big opportunity and challenge which emerged is speed. As customers are expecting to access their financial services through new channels and financial organizations are expected to start leveraging integrated systems and big data to gain deeper understanding of their customers need. Technology is moving at accelerating pace, customers are having less and less trust and lock-in with their current banks and online technology is raising serious questions as to “whether traditional banks can bring new technologies to market fast enough to retain and grow customers.”

Microfinance organizations need to think about speed more than anyone. Their markets are being quickly settled with new nimble players who are innovating with branches on wheels, mobile channels, agent networks and whatever other service channels they can to reach their clients. These entrants may not look like the banks of old but may be a post office, a telecommunications company or an online startup but they are meeting the same client needs.

The technology capabilities now exist but banks must quickly implement them. If they don’t, new entrants, without the burden of legacy systems, may prove to be more nimble and offer more differentiated services to customers.

MFIs may have many financial disadvantages compared to banks but at least they don’t have the burden of maintaining a massively expensive infrastructure with huge mound of COBOL spaghetti code which nobody knows. With subscription servicing and cloud computing eliminating the the majority of up-front costs, innovative financial service providers should be able to quickly pivot to new technology to improve internal operations and react faster to market needs.

They just need to have the foresight to make the jump before the transition before the market leaves them behind.