Fintech’s Digital Transformation

The integration of new technologies into our lives has reshaped our daily behavior and many sectors have focused on developing new products and solutions to adapt to the new routines of their users.  Technological advancements offered for the benefit of humanity are rapidly adopted by the business world and used in the development of new products and services in the creation of modern business models. The finance sector has become one of the most successful sectors in system integration that closely follows technological developments. The last link in the chain from the birth of money to the development of modern banking is called FinTech. Fintech, which is an abbreviation of Financial Technologies, is a broad term that covers every solution offered by technology in the field of finance and has also become a very valuable sector.

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We can consider the development of financial technologies in two ways. First, the transformation of traditional financial transactions with technology. Large banks and financial institutions closely follow technological developments and even provide incentives to pave the way for these developments. They embrace technology and use new technologies to improve the products and services they offer to their users. Thus, traditional products and services are delivered to the user in a better, faster, and easier way. This enables users to perform their daily tasks faster, more efficiently and less costly.

The main impact of financial technologies is disruptive innovation. Products and services developed from a completely new perspective cause user behavior to be reshaped, new routines to be developed and paradigm shifts in total. With each innovation, the user’s expectations and needs are reshaped. In the new wave of change, the user’s expectations for new versions and developers’ visions continuously feed the ecosystem.

Blockchain and distributed ledger technology, online wallets, mobile payment methods, financial software, mobile applications… are just a few of the innovations that touch everyday life and reshape not only the financial sector but also social life, so to speak.

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The development of FinTech’s is affected by various dynamics such as capital, human resources, regulations, and user base. Without capital support, qualified human resources, and regulations that protect and incentivize entrepreneurs, investors, and users, it is unlikely that a business idea will mature and materialize. Every new idea needs someone to accept, embrace and develop it. If this innovation is expected to create economic value, it must be demanded by users. For this, the socio-economic structure of the society in which the innovation is introduced, and its availability are as critical as the innovation itself.

Although the entry of fintech companies that overcome certain entry barriers in the finance sector may seem like a threat to traditional institutions, this is an opportunity for all stakeholders in the sector, given the potential of FinTech’s to increase the overall profitability of the market.

The digital transformation, which has become too much a part of our lives to be ignored all over the world, has reached dimensions that cannot be ignored or denied for all players.

In his article published in 2016, JP Nicols* humorously discussed the traditional finance industry’s reaction to FinTech’s and defined the Fintech Grief Cycle with five stages of denial, anger, bargaining, depression, and acceptance.

*JP Nicols (2016). The Fintech Grief Cycle for Bankers.

In a time of denial, anger and depression, the world is rapidly consuming existing innovations and is already getting ready for future innovations. In the new trend called Techfin, technology giants such as Amazon, Google, Facebook, who use their technology to improve the customer experience in e-commerce and many other online activities, have started to develop the market with the payment solutions they have developed. The fateful cycle applies to Techfins this time too. But there is one fact that organizations and individuals should not ignore: time is passing, and it is passing too fast to be lost in denial, anger and depression.

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