What’s next in fintech and digital engagement? Look to the Asian market.

Financial services providers in the U.S. are lagging behind global trends in fintech and digital engagement. Providers in Asian markets are years ahead in digital finserv. Their innovations stand as good predictors of what’s coming to the U.S.

If all you’re doing is following domestic trends, you’re falling behind

Fintech is nearing saturation with its domestic trends of traditional banking services, such as remittance, credit, GPR, prepaid, and digital wallets.

The 2017 market size of digital remittance globally exceeded $1.5B, and is predicted to grow to about $8.6B by 2025, according to marketwatch.com. And as nearly half of the nation’s physical banks have disappeared between 1995 and 2015, and dramatically fewer Americans actually enter what banks do remain, the digital offerings for finserv have exploded. Banks are scrambling to update their services digitally while competing with companies that offer payments and wallets like Paypal, Zelle and Venmo to Apple Pay and Google Pay; or with lenders like LendingClub and OnDeck; and the many and increasingly growing numbers of fintech companies trying to be amongst the top players.

But if you’re relying on these services to stay competitive, you’re falling behind. Fintech and financial services providers are moving fast globally, and they are reaching beyond the obvious.

As one Finextra blogger writes, “…future leaders should rather study the business models of challenger banks in Asia and implement an ecosystem mindset for their digital transformation strategy.”

Build an ecosystem of products and services

Mobile transactions in China in 2017 exceeded $18.7T, more than Visa and MasterCard global transactions combined. With two dominant players in China’s fintech market — Tencent and Alibaba’s Ant Financial — it’s not difficult to see why.

In addition to their market size and regulatory environment as impactful factors, these providers are taking an approach that U.S. fintech and finserv providers are going to have to embrace to be competitive.

As The Economist put it: “…Ant and Tencent are more interested in hooking users on other financial services than in payments alone. Once a user is on one of their platforms, mutual funds, insurance products and virtual credit cards are accessible with a tap of a finger on a phone.”

In other words: they are providing an ecosystem of products to enhance user engagement. U.S. providers have to go beyond traditional financial services in imitation of traditional banking, and to add better, more comprehensive products to their money lines

Start creating a competitive advantage: Insurance is next

Insurance is one of the products consumers need and will attach themselves to as a service to engage with fintech and finserv providers. As noted in a previous post, 40 percent of adult Americans don’t have life insurance, 80 percent don’t have disability insurance, and 59 percent of renters don’t have renter’s insurance. These gaps place Americans, especially low- to middle-income Americans in precarious states, where just one unexpected financial expense might derail their lives.

The opportunity for fintech and finserv providers is to offer no-cost insurance to consumers in exchange for pre-established engagement behaviors that support organizational target goals. Consumer behaviors might include a making timely loan payments, topping up a GPR prepaid card, maintaining a certain balance on accounts, or a specific level of engagement with a platform. In return for their behaviors, consumers are rewarded with insurance products at no cost that protect their financial lives. The products offer them financial protections, while incentivizing loyalty and habituation to a fintech provider, and serving corporate performance indicators.

Ostraa is diversifying fintech offerings

Anticipating the trend, ostraa has created something unique in the U.S. market. Working within the U.S. regulatory framework, ostraa has developed life insurance products to wrap around fintech and finserv platforms to serve both providers and consumers. Ostraa’s inclusive insurance products are priced to be offered at no cost to the consumer and advantageous to providers by exchanging them for the behaviours they seek to drive their key performance indicators. Delivered through mobile distribution platforms, they are designed to open gateways into more expanded insurance products and services and allow us to ultimately build Inclusive Insurance products for an underserved population with minimum friction.

Offering insurance for behaviors of engagement is one way fintech in the Asian markets are diversifying the fintech ecosystem. U.S. fintech companies will need to diversify their offerings if they are going to stay ahead of the game. And ostraa is helping them do it.

Let us know how we can help your company partner with ostraa to diversify your fintech offerings. Contact us as Maximilian.Weiner@ostraa.com.