Thursday, April 13, 2017

Fintech is built on Microservices


Today, we have the web at our fingertips. We are now deeply connected to Internet for most parts of our daily life. We are moving whole business segments from brick and mortar to the online space. That's not really big news - it is just called as progress and we observe it with more or less interest day in, day out. With the digitalization also comes a shift in the nature of the services offered to us. Consumers will change, the service landscape will change and banks will need to adapt - which means they will drastically change, too.

Customer centricity and brand value experiences are key for Banks

Banks are institutions which touch a multitude of business services. Banks are trusted by the customers more than any other business. If banks make use of their trustworthiness and develop a strong and intelligent branding, they have the chance to not only endure the great transformation of our service landscape, but to step out of it as the big winner.

Until then, banks will have to be open to tremendous structural alteration and put some serious effort into developing better customer experience. Because the change of the service landscape as we know it brings along increasingly sophisticated customers who are subjected to distractions from countless competing products and providers. If a bank can create an exceptional customer journey, it will rise again. If it cannot, it may just sink like a stone. Time to make a move, banks!

FinTech is now built on microservices

In the past two years, I have seen how Fintech has changed finance and banking . In next 20 years, banks will be a hub for financial services in one way or another, with these services developed in cooperation with, or solely by, third-party companies.

In retail finance, we can observe another trend: fragmentation. For ages, banks have been managing all the financial needs of everyone. Want to store your money securely? Bank. Need a loan for your house or your business? Bank. Need to transfer money? Bank. Especially these two areas of the banking business – lending and payment – have been subject to disruption by smaller competitors for some years now and banks have lost tremendous revenue to innovative and tech-savvy fintech companies. What used to be in the hands of very few institutions has been split up between numerous competitors.

There were only one a handful of options to get a loan ten years ago, which were mostly extremely time-consuming and involved providing loads of information about yourself. In this day and age you can choose between many online-lenders using sophisticated algorithms to calculate which loan you qualify for and you will receive the money only hours later. Payment has changed on several levels: not only are there several major service providers which integrate seamlessly into your preferred apps and services. But there are even alternative currencies such as Bitcoin and Ethereum based on the blockchain system.

Other areas will follow and the finance market will arguably become increasingly fragmented with more but smaller service providers, offering more diverse and individual products. Finance serves as a great example for how a new change is coming about, as the fintech scene is booming and most consumers have already used basic fintech products, if they are aware of this or not.

Still, this is only the tip of the iceberg in fintech and analogous to this, many business segments are already evolving. Or are about to.

Bank will become a hub for multiple types of services

In the past two years, I have seen how Fintech has changed finance and banking . In next 20 years, banks will be a hub for financial services in one way or another, with these services developed in cooperation with, or solely by, third-party companies.

Banking and finance are changing and so will insurance, healthcare, automotive, education and even agriculture or legal services. Many areas are ripe for disruption. Through collaboration and partnerships, banks, insurances, healthcare etc., could build strong bonds with customers and build a strong brand.

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