Fintechs – Centre stage in the new financial landscape

Press Release

GDS Modellica

24/10/2022

Both banks and customers have benefitted from the latest paradigm shift in the financial sector. Fintechs are playing a key role in innovation and development and have created a niche for themselves by putting the customer first

Fintechs have driven more effective risk management and prevention measures. Security on their platforms and systems must be a key priority

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.

In this new landscape, smaller finance companies and fintechs are seeking opportunities to innovate and offer advanced solutions that can help other financial institutions to improve the customer experience, stay one step ahead of fraudsters and improve process flow. User data protection is a key priority, and GDS Modellica believes that it is important for fintech companies to promote innovation if they wish to attract and retain more users, but they will also need to strengthen security on their platforms and automated systems to guarantee data protection.

According to GDS Modellica, “fraud is evolving at the same pace as technology, so innovation is vital if we want to keep ahead of fraudsters. Data theft and leaks provide cybercriminals with access to personal data, and that allows them to assume real identities or create new virtual ones. As a result, it is essential to have the right tools to combat fraud. Antonio García Rouco, managing director at GDS Modellica, asserts that is vital that fintechs identify and mitigate the risks associated with their services. Preventing and managing risk has considerable benefits when it comes to granting loans and credit facilities. Efficient risk management using predictive analysis improves decision-making processes and allows organisations to anticipate risks before they become a reality. This in turn increases the capacity to manage risk, which is, in itself, a huge competitive advantage. Ultimately, managing risk effectively means greater efficiency and, with it, greater profit.