Fintechs or collective innovation in financial service

Fintechs have accelerated the digital transformation of the banking sector and continue to do so. Their knowledge of technology and finance enables innovation in a slow sector.

The arrival of fintechs has accelerated the digital transition of banking and financial institutions. While some of this digitization has been done internally, alliances and acquisitions have been made to integrate the disruptive solutions of these financial startups. Today, there are more than 700 fintechs on the French market, whose innovative offers cover a wide range of applications: credit for individuals, professional financing, payment, wealth management, risk, insurance, etc. Each of these solutions contributes to innovation in the banking, finance and insurance sector.

As the number of consumer loan applications increased in 2022, payment defaults also increased. Thus, more and more French families are defaulting on their loans, according to the latest barometer of financial inclusion from the Banque de France. An additional 58,135 people were registered in the national file of payment incidents (FICP) last July, a 30% increase compared to 2021. A situation that risks getting worse with hyperinflation and the energy crisis we’re going through.

In this context and facing the interest rate ceiling, banks witness the erosion of the profitability of some products such as mortgages or loan consolidation. A situation where payment defaults, payment fraud and identity theft are added. In short, a complex environment that forces banks and financial institutions to implement seamless solutions and underwriting processes to gather all the essential elements for assessing creditworthiness profiles. But such an assessment requires appropriate assessment tools. Thus, the KYC (Know Your Customer) procedure allows financial institutions, in particular, to confirm the identity of their customers and, often in real time, to check the compliance of legal documents (identity documents, proof of address, tax declaration, etc.). .

Live videos also allow you to compare and confirm a person’s identity with previously submitted documents. Today, technologies developed by fintechs and increasingly used by financial institutions or insurers.

Payment, financing, regulatory compliance, identity verification… fintechs cover a wide range of functions

Producers of digital innovation, these companies specializing in finance and technology cover a wide range of functions. From financing to payment through credit, investment, insurance, transfer, authentication, verification or account collection, each fintech addresses a specific activity segment and offers new uses to individuals and businesses. Crowdfunding platforms facilitate participatory financing, paytechs offer innovative solutions (mobile payment, kitty, dematerialized receipts, savings through especially large programs, etc.), robo-advisors verify the identity and compliance of financial investments, authentication and regulatory experts. documents,

All these fintechs often rely on native AI, machine learning and automation technologies to optimize processes, improve efficiency, prevent risks and reduce costs. And if these disruptive startups were initially viewed as troublemakers by historic financial institutions, they are now supporting them in their digital transition. Because traditional banks, due to their legacy and lack of flexibility, have formed alliances or acquired certain fintechs to adapt at lower costs to the digital environments that mark our society, in parallel with internal digitization. In this ecosystem, where more than 700 companies rub shoulders (source, French Fintech association, 2022), each fintech participates in the collective innovation of the financial market. Thus, combining all their offers allows not only to cover almost the entire spectrum of the banking and insurance sector, but also to offer new uses and services to individuals and enterprises.

If the digital transition is taking a long time for traditional retail banks in favor of fintech and neo-banks, it seems that the balance between these institutions has emerged. On the one hand, banks that are digitizing under pressure, on the other hand, startups that develop innovative solutions for special use. As such, it is an entire complementary ecosystem where partnerships and mergers/acquisitions are happening to deliver an increasingly comprehensive and easy-to-use digital customer experience.

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