Are Fintech Firms Disrupting Banking?

Moving further into the 21st century we here at Universal Private Equity are constantly monitoring the effect of new technologies on traditional banking and finance practices.

With nearly 2,000 fintech firms in the UK and 42% of financial services firms partnering with fintechs, the world of finance is changing constantly. While the big banks still reign high and mighty, the new kids on the block are certainly ruffling some feathers as they challenge old-school financiers to rethink banking. Developing cutting-edge technology can streamline slow and costly procedures to deliver powerful financial solutions. From user-friendly banking apps to blockchain-driven currencies, fintech is reshaping the way we handle money. This article explores the future of finance and how the rise of fintechs is changing the world of banking for good. At Universal Private Equity we plan to be at the forefront of this financial evolution.

“What is the Difference Between a Traditional Bank and a Fintech?.”

It's important to recognise that the words' fintech' and 'bank' aren't necessarily mutually exclusive. While early fintechs focused on creating bolt-on products to enrich existing financial services, the line between banks and fintechs is becoming increasingly blurred. The likes of Monzo and Starling Bank have grown to become much more than just prepaid card services that integrate with an app. After showing the world that it is possible to combine clever tech with a trusted banking service, they earned their rights to fully-fledged banking licences. A fintech can evolve from one of three ways:

1. A new startup creates a product which is tech driven which is designed to solve a specific problem in the marketplace.

2. A startup then evolves into a bank.

3. A traditional bank acquires a fintech in order to use it's technology to improve it's own service.

These new technologies are changing the delivery of financial services.

Whether it's finding shortcuts to do things more efficiently or cutting costs through automated processes, here are two ways that fintech is changing the financial sector:

• Improved service. While traditional banks rely on hooking customers into an entire ecosystem of services and products, fintechs narrow their focus towards doing the small things well. Fintechs target specific problems and build trust with customers through referral-based acquisitions. 90% of fintechs agree that customer experience is king.

• Better Value. If a fintech isn’t regulated as a deposit-gathering institution, they have the freedom and flexibility to create lean business operations which save customers money.

“We believe here at Universal Private Equity that now is the time to plan to adopt these new technologies as this will allow us to provide much better value to our clients by launching innovative, tech driven products”