The financial technology (Fintech) sector has emerged as a disruptive force, reshaping the
traditional landscape of global banking. Fintech companies have used technological
advancements to revolutionise financial services, providing innovative solutions that
challenge the status quo.

In exploring the transformative influence of Fintech on traditional banks, Andrew Maren,
founder and CEO of fintech firm ProfitShare Partners, says the fintech revolution has
altered the customer experience (CX) and poses new challenges for traditional banks –
and its transformative influence is growing.

“From mobile payments to blockchain technology, Fintech advancements are changing how financial services are delivered and consumed,” Maren says. “The rise of innovative
lending platforms, robo-advisors and digital wallets have disrupted traditional banking
models, providing customers with faster, more efficient and cost-effective alternatives.”
Here, he notes the success of ProfitShare Partners in enabling entrepreneurs and SMEs to
access funds in a way traditional institutions cannot. “We are here to help businesses
in need. At ProfitShare Partners, we believe that entrepreneurs and emerging businesses
drive the economy.

“By partnering with SMEs who need only show proof of the purchase orders and contracts they have been awarded by corporates, potential clients are able to apply for our financial products online and get a response within 48 hours,” Maren says. 

“Without the need for a long financial history and other financial institutions’ requirements,
we can assist with speed and agility, allowing SMEs to take on orders
they do not have the cash flow to achieve on their own.”

Impact on CX and financial services

Maren points out that mobile banking apps have become a cornerstone of Fintech, offering
users seamless and convenient access to their financial accounts. “Fintech’s emphasis on
user-centric design has elevated customer experience in the financial sector.
“Traditional banks are now being compelled to enhance their digital offerings to match the
convenience and efficiency provided by Fintech competitors, he says. “The ability to
conduct transactions, manage investments, and access financial information from the palm
of your hand has become an expectation rather than a luxury.”

The emergence of open banking, facilitated by Fintech, has encouraged collaboration
between traditional banks and innovative startups. Open banking allows third-party
Fintech providers to access bank data, fostering the creation of new and improved financial
services. Maren notes that this collaboration has resulted in a more diverse and
competitive financial ecosystem, benefitting consumers with a broader range of options and
better services.

Challenges facing traditional banks

The rapid evolution of Fintech poses significant challenges to traditional banks. Legacy
systems, often characterised by rigid structures and outdated technology, hinder the agility
required to compete in the digital era. Additionally, the regulatory landscape has struggled
to keep pace with Fintech innovations, creating uncertainties and compliance challenges
for traditional banks

“To stay competitive,” Maren asserts, “traditional banks are investing heavily in digital transformation initiatives – modernising infrastructure, embracing cloud computing and adopting agile methodologies to enhance flexibility. In addition, collaborations with Fintech startups through partnerships or acquisitions have also become a common strategy for traditional banks looking to integrate innovative solutions into their offerings.” 

The Fintech revolution has severe effects on both consumers and businesses. Consumers benefit from increased accessibility, lower costs and more personalised financial services. “The overall democratisation of financial products enables a broader spectrum of individuals to participate in investment and banking activities. In ProfitShare Partners terms, this contributes to SMEs creating jobs and participating in growth in financial equality of staff,” Maren says. 

Challenges and opportunities 

For businesses, the rapidly evolving financial landscape presents opportunities and challenges. Says Maren: “Fintech solutions streamline financial processes, improve efficiency and provide innovative funding options.  

“However, businesses must adapt to the changing expectations of consumers, embracing digital transformation to remain competitive in an environment where technology and customer experience are paramount.” 

Maren believes the global Fintech disruption is redefining the entire banking sector, driving traditional institutions to adapt or risk becoming obsolete.  

“As Fintech continues to evolve, the financial landscape will see further innovation, collaboration and competition. Furthermore, consumers and businesses benefit from the ongoing transformation as the industry strives to deliver more accessible, efficient and customer-centric financial services.”