Fintech is revolutionizing the world of finance, and traditional banks worldwide are reacting — boosting mobile services and shuttering branches to trim costs — all in an effort to stay in the game.
Over the past decade, venture capitalists, private equity firms and a number of other big players have been pouring money into fintech start-ups. Since 2010, more than $50 billion has been invested globally in almost 2,500 companies as these innovators redefine the way we bank, according to Accenture. In the United States alone, revealed a Citibank report, investing increased from $1.8 billion in 2010 to $19 billion in 2015.
Although only about 1 percent of North American consumer banking revenue has so far migrated to these new digital business models, claims the report, that number is expected to increase to about 10 percent by 2020 and 17 percent by 2023 as consumer behavior continues to shift toward digital ways to save, spend and move money.
The United States and Western Europe need only look to China's banking industry to see that the impending disruption is real. There, companies such as Alipay and Tencent already claim to have more clients than the country's top banks. This is due largely to high Internet and mobile penetration, a large e-commerce system with internet companies focused on payments, unsophisticated incumbent banking and accommodating regulation.