Ten Reasons explaining why the Fintechs are successful

Press Release

GDS Modellica

15/02/2023

Changing customer behaviour and technological innovation have transformed the financial ecosystem.

GDS Modellica highlights 10 reasons Fintechs are becoming more popular and robust, increasing credit fraud along the way.

The financial ecosystem has changed completely, and the entry of new players on the scene has been more than a necessity with the application of new technologies. Fintechs are gaining presence and have established themselves by offering technological financial services, complementary or different from those typically offered by traditional banking, specialised in various types of platforms, in payments and transactions, personal finance, investment consultancy and marketing, or even alternative financing for companies and individuals. The pandemic, especially confinement, forced users to manage their finances digitally, increasing the use of new technologies and new services; in Spain, more than 100 new fintechs have emerged between 2020 and 2022.

According to the World Retail Banking Report 2022, conducted by Capgemini in conjunction with the European Financial Management Association (EFMA), 75% of customers are attracted to the cost-effective and seamless services of Fintech. Another study carried out by McKinsey Consulting reveals that consumers are demanding more flexible processes, and in the wake of the pandemic, they are embracing new options. With 71% preferring multi-channel interactions and 25% wanting a digital experience with their bank, these data explain why users are switching from banks to Fintechs. The reasons for Fintechs’ success are endless, but GDS Modellica outlines ten of them:

Change in consumer mentality,
Easier access to credit
Speed and agility of procedures
Flexibility and comfort
Simple, easy-to-understand interfaces
Orientation to customers and their needs
Filling the financial gaps in traditional banking
Increased internet access for users
Increased specialisation
Perception of security, trusted sources

In addition to the agility, speed, and user-friendly experience right from home, the key to Fintechs’ expansion and positioning is their focus on customers and their needs. Conversely, this greater presence and positioning of Fintech companies have also triggered fraud. According to the Report, The State of Fraud in Spain 2021-2022, published by the Spanish Association of Companies Against Fraud, 53% of the participating financial institutions confirm an increase in fraud compared to the previous year (2020), more particularly with a rise in the perception of fraud of 15%, and 40% of those surveyed confirming that the average amount of fraud has also escalated.

Regulation, compliance and general risk management represent an operational burden for financial services that need to use appropriate tools and solutions to help reduce fraud and provide better services to customers. Financial risk management brings significant benefits to lending and credit. According to Antonio García Rouco, CEO of GDS Modellica, effective management, a result of predictive analysis, improves operational efficiency, offers informed decision-making, anticipation capacity, and the possibility of managing higher risks, among other competitive advantages.

Banks lose billions every year to fraudsters, who use stolen personal information to create new accounts, making technological solutions essential to counter them. García Rouco contends that to combat fraudsters successfully, financial institutions need more valuable tools and better-integrated technologies across the whole organisation.

At GDS Modellica we have MODELLICA Fraud Engine, a technology developed to detect and prevent fraud in loans and credits by identifying fake profiles, fictitious users, false information or bank accounts that impersonate identity. This solution provides organisations with confidence and security on their way to digital transformation: increasing their efficiency and operability.