The mainstream financial services industry has gotten used to a stable ecosystem, facing virtually zero threats at least from the technological aspect. However, things have changed in the past couple of years, thanks to the discovery of potential applications of blockchain technology.
Growing interest in distributed ledger technology suddenly accelerated the financial technology (fintech) sector, after many startups and individuals started creating new, innovative products by leveraging on various unique properties of cryptocurrencies and their underlying technologies. These new developments have completely changed the dynamics of the financial ecosystem.
The new technology boom has got the mainstream financial institutions worried as they now face an ever-increasing risk of losing their businesses to the new breed of fintech startups. The risk to financial institutions is not localized to any one country or region, but the trend is evident across the globe.
According to a recent report by PwC, over 67 percent (in the Indian market, while the global average stands at 80 percent) of the financial institutions believe that their businesses are presently at risk. The PwC Global Fintech Report states that almost 95 percent of well-established financial institutions are actively seeking partnerships with fintech firms while investing more resources towards fostering in-house innovation.
An Indian newspaper quoted PwC India Partner and Leader – Fintech, Vivek Belgavi on the current fintech scenario in the country. He said,
“A majority of the players say they are embracing Fintech and seek to utilize it to grow and transform their businesses. Fintech to us is really about the interplay between different players in the ecosystem and how they work together to disrupt the Financial Services industry. The power of Fintech lies in collaboration.”
Even in a conservative market like India, customers are increasingly opting for non-traditional financial services to make payments and transfer funds. The heightened interest in distributed ledger among many such service providers will soon make room for faster, economical and more secure services, based on blockchain technology.
Based on the current scenario, one can safely speculate that the near future will see startups and incumbents in the banking, finance and fintech sector joining forces to offer innovative financial services at competitive prices.
Ref: Economic Times | Image: NewsBTC