The future of finance is increasingly digital. This is borne out by the changes sweeping the world of banking, financial and insurance services, which in recent years have rethought and, in some cases, revolutionised the world of finance, so much so that people are increasingly talking about Fintech.
Fintech, however, is not limited to the banking and insurance sectors. It is made up of a plurality of assets, ranging from open banking to APIs (Application Programming Interfaces), to roboadvisors, process automation and services offered by BigTech, referring to a myriad of new digital processes that are now an integral part of our daily lives.
WHAT IS FINTECH
There is no globally recognised definition of the word “Fintech”, so much so that analysts use the term Fintech to refer to all digital innovations in the financial sphere, regardless of which actor develops and delivers the product or service.
Fintech is a market that has grown steadily over the last 10 years and, even during the hardest periods of the pandemic, has not contracted, consolidating its strength in embedded finance. Experts and analysts are confident that the sector will continue to grow throughout 2022, as it increasingly integrates financial services with traditionally non-financial assets.
BANKING-AS-A-SERVICE
One of the most developed fintech sectors is banking. Banking-as-a-Service (BaaS) represents a key opportunity for banks to develop and evolve, and is also highly appreciated by customers who are abandoning the traditional concept of banking and embracing a new financial and digital evolution. Thanks to integrated digital functions and applications, banks can access a broad portfolio of financial services and products through the use of new channels, integrating banking services and products through third-party distributors.
According to a study conducted by Deloitte, Banking as a Service is effectively reconfiguring the banking value chain by enabling third-party distributors to offer financial products and services. This is one of the new frontiers of FinTech and is shaped by the combination of a non-financial service provider, such as a car sharing or food delivery service, and a financial service (initiating payments, taking out insurance or applying for loans).
BUY-NOW-PAY-LATER
Thanks to the evolution of digital technologies, the world of payments is also experiencing a period of great ferment, so much so that experts consider it to be one of the fastest growing markets with immense development potential.
In this constantly evolving scenario, the Buy Now Pay Later, an instalment payment method that mainly involves the world of e-commerce, deserves a closer look.
Buy Now Pay Later (BNPL) is a type of short-term financing that allows you to buy an asset and pay for it in the future. BNPL provides benefits to both the seller and the consumer: the seller has the opportunity to build customer loyalty by allowing them to buy now without having to pay, while consumers enjoy the possibility of deferring the purchase over time, as well as using the service free of charge.
Most BNPL companies are currently located in the US, followed by Australia, the UK and Singapore. Globally, the main players are Klarna (Sweden), Affirm (USA), Zip co (Australia), Uplift (USA) and Iwoca (UK). It should be noted that this market does not only involve recent economic players but also global giants such as PayPal, Visa, Amazon or Ikea.
PAAS: PLATFORM-AS-A-SERVICE
If banking and e-commerce are among the sectors that analysts believe will lead the way in fintech in 2022, another area that will drive the new digital finance is platform-as-a-service.
Techno finance is constantly trying to balance two fundamental aspects of its offering: security and service efficiency. PAAS addresses both requirements through its cloud computing offering, which provides users with a cloud environment in which they can develop, manage and deploy applications using third-party hardware and application software platforms.
Platform-as-a-Service enables a number of application and business advantages over using a local platform, exponentially deploying network resources and greatly developing the cloud as a physical location for digital development and sharing.