
Innovation in FinTech: SFL’s Perspective
Fintech is no longer a buzzword; in fact, it’s quickly turning from the future of financial services and institutions to their present. The bad news for companies in the sector that are still holding on to outdated practices and systems is that probably their competitors don’t.
It seems every industry player has something to say on the topic, making in one of the most discussed terms and accumulating a huge number of studies and stats that we looked into to help you get around.
Let’s have a taste of how huge the fintech market already is for the starters:
A report from Nordic Startup Bits states that investment in fintech has more than tripled over the last few years, jumping from $3 billion in 2013 to $12 billion in 2014 and now close to $50 billion in 2016.
So what backs up and causes innovation in fintech?
As a company that has been following this change and transformation for the past couple of years, we definitely note huge competition in this sphere. And competition in itself is a huge driving force, along with some of the reasons we singled out below:
- The demand factor
Today the demand in innovation is mostly driven by millennials who have the mobile-first approach and who hate having to wait that queue at the bank. To satisfy the demands of this generation, traditional financial institutions and banks have to introduce the necessary flexibility into their processes. When they fail, startups take over.
A recent Tech Chrunch article states that 39% of all smartphone users have made a transaction with their mobile in 2015 and of course this number is growing as we turn from the overwhelming number of users being the generation X representatives to prevailing Millennials and Generation Z. The fact that millennials do not favor traditional financial institutions is a huge driving force for fintech. A 2015 Vision Critical study showed that millennials opt for alternative payment methods much more frequently.
But what’s most interesting is that they do not trust banks and traditional financial institutions with their finances. Instead, they want these issues handled by technology companies.
While the fast-paced development touches upon (seemingly) every aspect of life, it’s surprising to see how many branches of finance rely on outdated practices and processes .
One example is the money remittance industry. According to the Migration and Remittances Factbook 2016, the amount of money foreign workers sent home in 2016 amounts 601 billion. And this money is sent “back home” relying on money transfer companies and banks that have huge transaction fees and often hidden costs. Besides, foreign workers have to wait long queues and there’s always the human factor. This is just one example of the industries that can completely revolutionized with the introduction of fintech solutions.
- The competition factor
Do Apple Pay and Google Wallet sound familiar? After its introduction in 2013 and its rollout in 2014 Apple Pay has revolutionized the outdated payment models relying on magnetic cards. Similarly, Google’s peer-to-peer payment method that allows to send and receive money without any fees and with the sole use of a smartphone made a huge step forward in revolutionizing the outdated money remittance systems.
In March 2016 Facebook introduced a new payment feature through Messenger. Given the staggering number of Messenger users, this is a service that will be available across the globe.
Reuters claims that Snapchat is working on a FinTech algorithm to help users develop personalized investment strategies for retirement planning.
And these are just a couple of the huge names.
- Capturing traditional markets
Given all the stats above, banks and financial institutions have 2 options: pull their weight or lose their customer base. Innovation is gradually forcing them to adopt more flexible approaches to not lose hold of their position in the market.
- The disloyal customer factor
This is the new reality of service providers: as the number of offers and opportunities in the market grows, customers are becoming more and more demanding and less loyal. They want their service provider to offer convenient services for affordable prices, and they want them to be personalized and in line with their everyday activities. If it’s not you, it’s a competitor who has put in the effort.
SFL’s insights on the topic of innovation in fintech
We at SFL have come a long way down the FinTech path, helping clients establish solutions that walk in hand with the current requirements of the ever-emerging markets. So, as technology startups are disrupting a couple of finance-related industries (personal banking, money remittances, mobile payments, loans, asset management, fundraising to name a few) we are here to help you make up your mind on whether innovation in fintech is something your financial institution should be looking up to.
If you are considering putting your business in line with innovation and creating a sustainable solution that will be the expression of your customers’ needs and preferences, we at SFL know the way about it.
Read one of our case studies showing how we helped Inecobank have 400% user base growth in a year. Got more questions?
About this author:
Armine Hakobyan is a technology-oriented content specialist and social media geek.

