Like most things that arrive suddenly and unexpectedly, the wave of financial technology (i.e. Fintech) startups that appeared at the start of the decade were met with skepticism, apprehension — even contempt. The so-called Fintech Revolution threatened to take down the financial industry in the same way e-commerce had disrupted traditional retail so many years before.
It’s only natural, then, that these two maverick tech industries have become something like brothers in arms as they do battle against the old guard. Fintech is still in its nascent stages and continues to be widely misunderstood — by many online retailers as well as the wider population — but it presents a multitude of opportunities for merchants and has tremendous potential to propel your e-commerce business to new heights.
Fintech is changing your business
Fintech stands for Financial Technologies, and in its broadest definition, that’s exactly what it is: technologies used and applied in the financial services sector, chiefly used by financial institutions themselves on the back end of their businesses.
However more and more, FinTech is coming to represent technologies that are disrupting traditional financial services, including mobile payments, money transfers, loans, fundraising, and asset management.
Savvy online merchants who pay attention to the technological innovations being developed by fintech companies and, more importantly, the customer-centric principles behind them, should be able to make the same methods work for their own businesses in the near future.
Below are just a few of the reasons why online retailers should closely watch the fintech space.
The digitalization of financial services
Mired in traditional thinking and legacy practices, industries throughout the financial services sector were — prior to fintech — notoriously ineffective in establishing digital relationships with their customers. The rise of fintech, however, has changed that, forcing even the most rigid banks, insurers, mortgage lenders and wealth management firms to realize that, “We thought we knew our customers, but fintechs really know our customers,” as one global bank executive was quoted in a 2016 PwC report.
The threat of fintech has created a major shift throughout financial services and, by adopting fintech technologies and strategies, the sector has for the most part finally learned how to digitally connect with, engage and keep their customers. Fintech essentially introduced e-commerce to financial services, and it is worth watching how these industries continue to expand their online capabilities by using some of the methods below.
Improved payments options
The common denominator between fintech and e-commerce best known among online business owners is the digital payments industry, without which online retail could not exist.
Thanks to innovations by fintech companies, consumers now have more options than ever to complete their online purchases in real-time, from virtually any device, anywhere in the world, using a variety of currencies, with more digital transactions than ever being completed — faster, easier and more securely by the day.
Mobile wallets, point-of-sale credit, faster payments, cross-border e-commerce, blockchain and cryptocurrencies are all the result of emerging fintech technologies that continue to improve at warp speed and offer unlimited potential for online retailers. Merchants who keep a blind eye to these developments and who do not have a reliable, trustworthy payments processing partner to help them navigate this space will quickly fall behind.
Increased security measures
In addition to making payments faster and easier, fintech is largely responsible for making transactions more secure. One of the biggest drivers of innovation is biometric technology, the use of fingerprint, facial, voice and retinal authentication, and its application toward more secure payments.
While fingerprint recognition is a basic feature of today’s iPhones, the use of biometrics to verify e-commerce payments has yet to be used outside of the testing phase. Merchants who yearn to offer their customers more secure payments processes would be well advised to follow these developments closely this year and, again, be sure to make it a topic of discussion with their payments processing providers.
Automated customer service
One of the biggest favors fintech has done for financial services industries was to teach them the importance of customer service in an increasingly digital world. For years, long after the rise of e-commerce, banks and insurers relied on their physical, brick-and-mortar presence to communicate with and serve their customers.
The threat of fintech forced these industries to change their thinking and their ways, and while digitally connecting with customers has long been the foundation of e-commerce, fintech companies are developing new methods of which many merchants may be unaware.
One such method is through the use of chatbot technology to deliver an automated approach to customer service. Chatbots can provide online shoppers and merchants with additional lines of communication, and the latest developments include personalization of services for customer personas or, potentially, individual shoppers.
Faster delivery methods
Fintech hardly invented drone technology but engineers within the space are most definitely working toward perfecting it as a viable means of product delivery. To date, drone deliveries have not graduated past the testing phase, most famously by Amazon, which hopes to make it a reality by offering it to customers by the end of this year.
The major hurdles thus far in development have been drones’ inability to withstand significant weights and travel significant distances. Most merchants are already watching this space interestedly, and don’t be surprised if the game-changer comes from the fintech industry.
Jared Ronski is co-founder of MerchACT and works with merchants globally to ensure they are paired with the right merchant account for their specific business needs. He has worked closely with higher risk business models and has provided companies of all sizes with payment processing solutions. Connect with @MerchACT on Twitter.