FinTech or otherwise, financial technology is a form of technology that involves designing and delivering financial products via technology. This technology happens to be having an impact on financial institutions. It also influences the actions of customers, merchants, and regulators in a wide industrial range. This research activity will therefore determine the manner in which this digital technology and other kind of pervasive technologies challenge the fundamentals of the financial sector. The research will also determine how FinTech leads to the emergence of modern kind of payment systems including peer-to-peer methods of exchange and also turbulence increase within the currency market. The developed case study will explore the strategies of a FinTech companies. There are five lessons that this research activity will solicit with regards to better management. One is to identify the challenges of Fin Tech companies; the other is to leverage the available opportunities amidst the financial sector disruptions. The research will also identify the ways in which the digital technology:
Offers its strategic capability to occupy a niche in the market within the financial sector
Promote the generation of different credit scores depending on non-traditional forms of data
Improve the financial inclusions in exclusion of the market segments.
Introduction
Scope of the Research
Core Issue
In within the previous year, I worked for two companies, a Payment Consultancy firm and a Payment Service Provider. The former is called PaymentGenes while the latter is Dimebox. Within these two companies, I got introduced to FinTech, Payments, and Banking industries. In these institutions, I met and spoke to many inspiring personalities including Raymundo Leefmans, Gillian Tans, Rupert Keeley and a lot more. The process was during some meeting with ICS. Issues that were discussed involve investors and start-up firms that disrupt the traditional payments methods with new technological forms of payment. On the contrary, neither the ICS management nor the investors of FinTech were able to recognize the strategic opportunities offered by FinTech with regards to the payment system that is established online. There is, however, a link attaching FinTech to the online payment industry which is yet to be identified by most of the well-established firms.
In Management
In this part, the underlying management issue and the relevant target group that could benefit from this research will be demonstrated. Both FinTech companies and online payment companies could benefit from each other. However, after performing an in-depth research, no formal partnerships have been established between these two industries. Therefore, it is advisable for both parties to gain knowledge about each other's industry and research potential strategic partnerships to complement both industries. However, no such reports exist, and therefore it would be advisable to use this report to recognize and identify these subjects. FinTech investors and strategic managers are the most relevant target group. This is because FinTech investors are following the developments in FinTech and could use the provided information from the report to improve or complement their current investments. Strategic managers from FinTech or Online Payment companies can benefit from this report because they can use the report to identify potential partnerships and recognize certain patterns to improve the efficiency of their current value chains.
Research Question
The main questions that must have their answers solicited include:
Will the new phenomena of FinTech companies influence online payment systems and if so, to what extent?
And what are the options for the online payment companies to cope with this phenomenon?
What eco-system for online payments exists currently? Who are the key players?
What is FinTech? How does it influence the online payment industry?
What strategic options do online payment companies use in coping with the FinTech phenomenon?
Research Objectives
This research activity will:
Explain the core functionalities of the existing payments ecosystem and identify the parties that are mainly involved in the eco-system.
Provide FinTech investors with necessary information regarding the online payment ecosystems.
Explain the meaning of FinTech while displaying its characteristics within an industrial setup.
Describe the manner in which FinTech elaborates on its functions with regards to the payment industry.
Provide information on how to ensure that the questions of the research are understood.
Describe the available opportunities for the online payment firms.
Background Information
There are widespread disruptions regarding the advances in technology especially after the rise of the FinTech. The global investments done in FinTech has grown in a massive manner. This kind of growth can be said to be a progression that the payment companies require to ensure increased annual incomes. FinTech is rapidly growing due to the issue of various technological advances converging. The technology has led to:
The affordability and availability of infrastructure
The maturity of technological applications
Easement of business operations
By examining the emergence of FinTechs microloan service and the manner in which financial systems changes play out, we will find out that technology happens to be having an impact on financial institutions. It also influences the actions of customers, merchants, and regulators in a wide industrial range. This research activity will, therefore, determine the manner in which this digital technology and another kind of pervasive technologies challenge the fundamentals of the financial sector. However, lending is identified as the most significant aspect of financial services that is influenced by FinTech. Other important aspects include transactions and payments, insurance, and wealth. Also, the issue of microloans with regards to FinTech isnt new meaning that activities such as lending or borrowing of money in small amounts have been happening for a long period. Nonetheless, firms can now give small loan services while technology is used as the aspect of reducing transaction costs.
Most of the FinTech phenomena can be studied under Information Systems (IS) including the mobile payment services, for instance, the M-Pesa service in Kenya. Others include the peer-to-peer lending system. The market for the P2P lending system has become a prominent platform. This peer-to-peer lending system has rapidly grown because there are fund supply investors and also the demand for financial access. The lending system has ensured that new credit information channels are created to gear the increase of financial access. Even though there is currently no data that is verifiable concerning peer-to-peer lending volume, by 2015 the volume was estimated to be greater than US$20bn40bn globally. The core funding is the retail investors who suggest that business borrowers, who are the MSEs could easily get credited. The MSE borrowers make up 20% to 40% of the borrowers from the peer-to-peer lending systems. The percentage is much higher in China compared to other developed markets.
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