Over the last decade more and more Fintech companies have been pushing into the markets to either disrupt or complement the services of traditional finance companies. BBVA Research found out that especially directly after the financial crisis in 2008 these newcomers have been recepted as a very welcome change to the status quo with more positive than negative coverage. In Europe the number of banks declined by 25% and the number of their branches by 20% from 2008 to 2018. And between 5.000 and 12.000 (depends on strictness of definition) Fintech companies have been founded in the same timespan. But how does the media think today? Is Fintech the good or the evil? Let’s explore.
New ways of handling money are positive
We can say that Fintech companies stand for a paradigm shift when it comes to handling money. These new companies change every aspect of it, e.g. personal finance, mobile payments, credit scoring, loan services or investments. In the media the new solutions provided by Fintech companies are regarded as easier to use and often cheaper than comparable solutions of traditional competitors. But traditional finance has learned that a focus on innovation is crucial for staying competitive. Many big banks are either partnering with Fintech start-ups or found their own start-ups as an innovation incubator. Therefore, in the media there have often been stories of either an industry giant launching a new product that eliminates small competitors or the small company rivaling the big players. Nowadays the media focuses more on the partnerships. Another point that is linked to that is, that over the past years the Fintech sector got ever more niche-driven with start-ups providing solutions for every yet so small problem in the finance world. We see more collaborations of big with small or vice versa, showing us that there exists more often than not a symbiotic relationship between traditional and new companies.
Due to these scenarios the market participants see more and more solutions to their existing financial questions and overall the innovation war that is currently going on can be regarded as very positive.
Big vs. small
Many companies like PayRetailers have just begun their race to the top. We are in business since four years and our quick growth shows the market need for our solutions. But we are not alone in the Fintech space and many other companies that have been founded earlier than us already reached the sizes of some big traditional finance companies in their respective markets.
With the growth there comes responsibility and sticking to certain principles. According to the SIFMA Insights report about the evolution of the Fintech narrative there are 7 important areas:
- Client experience: Usability of services becomes important for financial services as well
- Technology expenditures: From optimistic to realistic over time
- Deployment: Hurdles considered first
- Goal: Transforming legacy systems to modern ones
- Regtech: Technology innovations are necessary
- Cybersecurity: Became one of the most important areas
- Data: Preprocessing and cleanup are the key
Whereas in the beginning the narrative has been “everything new is better and will change the world for good”, “Fintechs will displace incumbents” and “machines will replace humans” over the past decade the mood changed towards being more realistic: “Many solutions hold potential, but deployment takes long”, “it’s hard to change heavily regulated areas” and “human workforce evolves”. The role of Regtech has been downplayed in the beginning but it in itself is a legacy system and needs to be tackled. Nowadays it’s hampering the quick introduction of new processes and often the creation of entirely new regulations follows the technological innovation, instead of just altering existing ones like in the past.
In 2019 BBVA Research has done an analysis regarding the perception of Fintech in the media and social networks. They’ve found out the following things:
- Fintech has a more positive connotation than general financial services.
- Regulation and economics are the most covered topics in the Fintech-space since 2015.
- Blockchain is the hottest topic when it comes to Insurtech, general banking and payments.
- The public thinks of Fintech companies as start-ups, not as financial actors in the traditional sense.
Overall we can conclude that the perception of Fintech in the media today is more positive than negative. This is especially good for companies like us at PayRetailers that grow in the payment service provider sector of the big Fintech space. While regulation and blockchain are very special topics, we already have exposure to both areas as well and are in the process of implementing such technologies into our product suite. Our special setup with lots of partnerships with traditional financial companies like banks or agencies, gives an advantage in the consumer perception as being an established business. This is one of our big advantages over competitors.