There are undoubtedly a lot of challenges banks are currently facing. The dynamic regulatory environment and the rise of technology in everyday banking activities is changing the way we bank, and catering to this fast evolving dynamics is tough for most banks. This is where FinTech is making a difference.
According to the infographics created by DealSunny, a company that specializes in special offers and coupons, by the end of 2015, there are over 1362 FinTech companies spread across 54 countries in the world. Most of these are startups, and have collectively raised $25.8 billion in funding from investors in 2015. That brings the average investment to $44 million per company. Various FinTech experts also go on to say that United States and United Kingdom offer the best ecosystem, followed by Israel. These companies are clustered around Tel Aviv in Israel, London in UK, and Silicon Valley, Los Angeles & Boston in the US. The United States has the largest share in the pie, with $10 billion of FinTech investments.
If we look at the global investments in FinTech from 2010-15, the US alone raised $31.6 billion, Europe raised $4.4 billion with the overall figure going up to $49.7 billion. The investments have tripled from $4.05 billion in 2013 to $12.21 billion in 2014. The figure, as we can see, has doubled from 2014 to 2015.
Going by the growing need for FinTech solutions for banks and financial institutions globally, it is safe to say that FinTech has come of age and the demand is only going to get higher in 2016. We have done a short analysis of the scope and rise of FinTech in the recent decades.
What is FinTech?
The term FinTech was coined to explain the diaspora of IT enterprises in the banking and financial sector. The 2008 financial crisis revealed that despite significant investments in sophisticated data management systems, banks were unable to cope with growing risks and regulatory changes. Sensing an opportunity, various tech companies started offering banks a new approach, methodology and tools to address issues related to data management, governance and compliance.
This led to a huge plethora of technology enterprises focused on dealing with issues faced by banks and financial institutions, out of which regulatory reporting and compliance was considered to be the most important. The frequent reworking of financial regulations, constant need to manage and analyze data and tap customer behavior has led to FinTech innovations being high in demand for the last few years.
The rise of FinTech has opened up a world of possibilities. Businesses can offer more services for a fraction of the price of what it would have cost before. Let’s take a look at how it is transforming banking.
How is FinTech Transforming Banking?
Consultant Oliver Wyman estimates that for a global banking industry generating $US5.7 trillion of revenue today, around $US1 trillion of revenue and costs could be reallocated by FinTech disruption. And this is only the beginning!
FinTech is bringing innovative solutions to banking, lending and capital markets, and it is not just thousands of startups competing for the prize, big banks have joined in too. Large banks like JPMorgan Chase & Co, Citi, HSBC, and Barclays are investing heavily in FinTech research and supporting rising startups through accelerator programs to bring innovative new solutions to their customers.
Quoting JPMorgan CEO Jamie Dimon, “Fintech has been great at making it easier and often less expensive for customers and will likely lead to many more people, including more lower-income people, joining the banking system in the United States and abroad.”  James Eyers wrote for the Financial Review that, “FinTech has become ingrained in the strategic thinking of global banks because it is both a disruptive threat and an opportunity to enhance customer service and reduce costs.”
Large banks are investing heavily in FinTech (as the infographic shows) and small and medium banks too are doing their bit to ensure their customers get the best of technology. From mobile banking apps to giving customers more options through technology, banks are not only simplifying their processes but also doing more with customer data. With Big Data and Analytics, banks are using data to target their products and solutions to the right audience, and this is only making things easier and better for the customer.
How is Hexanika revolutionizing FinTech?
Hexanika is a FinTech Big Data software company which has developed an end-to-end regulatory compliance solution. The innovative machine learning big data solution improves data quality, keeps regulatory reporting in harmony with the dynamic regulatory requirements and keeps pace with the new developments and latest regulatory updates.
Hexanika helps establish a compliance platform that streamlines the process of data integration, analytics and reporting. The software platform can develop and clean data to be sourced for reporting and automation, simplifying the processes of data governance and generating timely and accurate reports to be submitted to regulators in the correct formats. The solutions also significantly reduce the time and resources required for everyday-regulatory processes, and are robust enough to be implemented on existing systems without requiring any specific architectural changes.
FinTech startups like Hexanika have also found recognition amongst entrepreneurs and investors. Hexanika was recently awarded by TiEcon with the ‘TiE50 2016 Top Start-up Winner’. Moreover, we were recognized in the list of ’40 RegTech startups to follow’ that is compiled by Jan-Maarten Mulder, a Banking Executive and FinTech & Data Investor at ABN AMRO. The continued support from our partners IBM and Synpulse goes on to show that FinTech is here to make things better for banks and financial institutions.
And we have more good news! Hexanika has been selected for the VC FinTech Accelerator program which kicked off Monday, May 16, 2016 in Little Rock, Arkansas. The Venture Center (VC), in collaboration with Fidelity National Information Services (FIS Global) announced that it received 150 approved applications from all over the world out of which, ten companies have been selected for the accelerator program. For more information, please see: http://eepurl.com/b2ajK9
To know more about our products and solutions, read: https://hexanika.com/company-profile/
Contributor: Vedvrat Shikarpur