The digital transformation has radically changed the financial sector with the emergence of new business models, apps and products whose primary goal is to improve efficiency and access to financial services. The roll-out of new services and technologies has, in turn, transformed the relationship between financial institutions and their customers. Banks have also achieved greater profits and customer loyalty by reducing Time to Market, while customers now enjoy greater convenience, faster services, greater autonomy and enhanced security. Ultimately, this paradigm shift has clearly benefitted both banks and their customers.
In addition to this, we have also seen the emergence of fintechs
. These are specialist firms offering financial technology that more efficiently cater for certain market segments, such as payments, loans or wealth management. Fintech companies have put the customer at the very heart of their operations. According to the Spanish Fintech and Insurtech Association (AEFI, in Spanish initials), there are four key reasons why fintechs have become an essential link in the financial value chain, driving great strides forward:
- They are driving new technological solutions that facilitate innovative products and faster, more secure, customer-oriented services. They also put customer protection first and are protected by a regulatory framework.
- They are facilitating new payment methods. The European payment directive (PSD2) makes payments more secure, protecting who has access to data and setting out minimum authentication standards through SCA (Strong Customer Authentication). Ultimately, they offer greater data protection for customers.
- They are enabling new forms of investment. Wealthtechs are transforming the investment and wealth industry, offering digital solutions for wealth management for all customer types. They are driving greater democratisation of the financial system.
- They benefit from a regulatory sandbox, a safe framework for users. In Spain, for example, the fintech sector is working to create the ideal regulatory environment where the customer is fully protected when using these new products.