The global fintech industry has shown unbelievable growth during the past 5 years. Also, fintech startups made a huge expansion and led with customer-friendly solutions developed from the ground up and unencumbered by legacy systems. Just before we start, let’s have a glance at what fintech defines.
The word FinTech describes the cross-disciplinary subject of finance, technology management, and innovation management. In other words, fintech combines any innovative ideas that make financial service processes better by offering technology solutions according to various business situations. Simultaneously, the ideas could also lead to new business models or even new businesses (International Journal of Innovation, Management & Technology, 2018).
Image author: Clay Banks
When talking about Europe, more people choose to use smart financial applications rather than going to the bank & making any finance-related operations.
In Denmark, people probably even forgot how the Danish Krones in cash look like since an enormous number of Danes have been using MobilePay for multiple financial operations. MobilePay, developed by Danske Bank, is a digital wallet that covers all payment demands. The application includes various financial solutions such as payments to friends, tinier physical shops, supermarkets, larger chains, recurring payments, etc. In January 2020, it was used by 98 percent of Danes aged between 20 and 29 years and by 97 percent of 30-to-39-year-olds (Statista, 2020).
The MobilePay application works similarly to Revolut, you need to type in the person's number and transfer a particular amount of money. And it actually started earlier than Revolut, in 2013, but it seems that MobilePay is already existing forever.
Meanwhile, not that far away from Denmark - in Germany, cash remains the most preferred mean of payment. In 2017, 74% of all transactions were made using banknotes and coins (Payment behavior in Germany, 2017). Die Deutschen lieben Bargeld bestimmt…
Why do we even present these different examples? In this article, we will dig deeper into a case study of Revolut as one of the most successful fintech & payment innovation examples during the past five years. Also, we will cover the question of how fintech solutions influence or transform traditional financial services.
Innovation of payment: Revolut case
Revolut is the key player in the world of fintech. Founded in 2015, a financial technology company based in London, United Kingdom, offers various banking services. Launched just in 2015?! Yes, definitely, the era of Revolut started only five years ago.
Image author: Paul Berbauer
By offering a mobile phone app & card that let them change money into about 30 different currencies at market rates, Revolut was formerly set up to help travelers avoid expensive foreign exchange fees. This feature was a real highlight of the fintech age, but Revolut did not stop with it.
In 2018, Revolut became the first digital-bank unicorn in the UK. Revolut, as an all-in-one fintech company, offers various banking services such as debit cards, stock trading & peer-to-peer payments. Britain's unicorn brings cryptocurrency exchange processes to the next level by providing customers access to cryptocurrencies such as Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and XRP.
In 2020, Revolut launched a bank under its European Banking license in Lithuania. Now, Lithuanians can transfer their accounts from an e-money account to a fully-fledged bank account. From digital payment applications to the real bank that offers multiple financial services. Revolut did this evolution in less than 5 years.
We can name the features of Revolut until the dawn, but this fintech company only shows how rapidly & enormously can develop fintech innovations.
What is the impact of FinTech to the traditional banking industry?
81% of banking CEOs are concerned about technological change speed, more than any other industry sector (PwC Financial Services Technology, 2020). The huge demand for innovation & technology development in the fintech industry leads to reshaping some of the traditional financial services.
Image author: Jonas Leupe
Decreased number of physical banks & face-to-face service
Nowadays, consumers need banking services, but they may not turn to a bank to get them. 3 out of 4 global consumers use fintech services for money transfer & payments (Global Fintech Adoption Index, 2019). We can indeed believe that at least mentioned financial operations in real banks might disappear with a question of time since people are selecting digital payment services.
According to the Global Fintech Adoption Index (2019), 1 out of 2 global consumers uses an insurance FinTech service. Can we see the future of the insurance industry entirely digitized? Well, consumers are still in the middle of choosing between digital & traditional services. The case studies from the Global Fintech Adoption Index report (2019) reveals a massive potential of digital insurance fintech services, but it depends on the innovation development in such a field.
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Written by Kristina Kirkliauskaite
This article was updated on February 6, 2021.