Oh yes! This is finally happening! Many established banks with billion dollars of reserved assets raise interest to tie up with new FinTech startups. The reason for this very unusual collaboration is very obvious. FinTech startups with tiny mobile apps are able to offer two major things which banks and their traditional services have never offered: Convenience, and security.
According to Capegemini report, while most of the traditional banks don’t follow a mantra of earning trust through better customer service, 90% of FinTech startups already consider enhanced customer service as the key part of their business strategy. As a result, customer acquisition becomes very easy for them. Investors are also emptying their pockets to a few disturbing FinTech startups.
Following image clearly depicts that how rapidly the FinTech startup managed to be the good eggs for investors.
Here, we have to appreciate the hidden gem - government who has never imposed any unnecessary law against FinTech startups to block their success path like what they have done with a few mobility startups, including Uber. In fact, they have introduced many digital financial services into government services with the help of a few FinTech startups.
For example, the government of a North Carolina state adopted the services of a USA-based Payit startup which enables the government to digitalize a few fundamental government services like tax collection and vehicle registration. Because of this partnership, now the citizens of North Carolina can register their vehicles from the mobile app. They can even pay the fee of registration online.
Meanwhile, Uk’s FCA (Financial Conduct Authority) initiated a proposal to develop a global FinTech regulatory named ‘Sandbox’ designed to boost FinTech innovation. During early 2017, the first edition of Sandbox regulatory began. With the effort of more than 20 FinTech startups from the UK, USA, Singapore, and Hong kong, it turned out a hit idea. Currently, Sandbox is helping any new FinTech startups by providing them access to data feeds and APIs from their industry-leading data partners for as-long-as six months. And the best part of Sandbox regulatory is that new FinTech startups don’t have to pay anything to practice on the very crucial data and APIs.
Last month on June 28, 2019, The world’s leading financial hub Singapore announced to issue five new digital banks license to new FinTech startups. In the official statement, the Monetary Authority of Singapore (MAS) quoted that the entry of new digital banks will add diversity and strengthen Singapore’s banking infrastructure with their innovative business models and strong digital capabilities.
The five new licenses which MAS is willing to provide can be comprised like following.
- Two full digital full bank licenses, enabling startups to offer all kind of financial services to retail customers.
- Three digital wholesale bank licenses, letting FinTech startups offer financial services to SMEs and to rest of the non-retail segment.
As soon as MAS announced it, small turbulence hit the FinTech industry. All FinTech startups around the globe have started working to grab this golden opportunity. However, MAS has set eligibility to obtain one license.
Understand the basic eligibility to obtain digital bank license in Singapore:
- The FinTech startup should be headquartered in Singapore and controlled by the citizens of Singapore only.
- If a FinTech startup doesn't belong to Singapore, it must have a partnership with any Singapore-based FinTech company.
- The company should have a track record in respective technology or in e-commerce business.
- Company’s value proposition model should be clear and serving unsatisfied needs.
- The business model should be sustainable.
There are other more requirements which are too long for a blog. So, here I am leaving a link of an official press release to learn more about it.
Taking back you to the UK, where the FinTech startup landscape is more profitable than any other parts of the world, the traditional European banks are relying more on FinTech startups. For example, The Bank of England published on its website that they have tied up with more than a dozen FinTech startups to enrich their online payment environment. The U.K central bank also works with small or medium scale startups for the sake of good user experience.
Oh damn! How can I miss out the USA? Well, the USA, on the other hand, is lacking behind to encourage FinTech startups. In the past, the government burned the candles from both sides to lower the bars, but individual states and inter-state organizations opposed every time. Because of this disparity between state and federal, FinTech startups face a lot of difficulties while navigating U.S regulatory. For instance, the digital payment startup has to gain a state license as well as register with the Financial Crime Enforcement Network (FinCEN).
Overall, the countries with clear leadership and less inner conflict are empowering the FinTech companies to leverage the life of people. Thanks to such governments, we are currently experiencing the era of FinTech 2.0 after FinTech 1.0 already exhibited its potential impact in the form of mobile wallets and net banking. This FinTech 2.0 is hiding a lot of innovative FinTech apps with groundbreaking features which are likely to be known in next 2 to 4 years, or maybe in next few months if all other countries stop taking a sunbath in some remote places and come under the shadow of the country like Singapore!
About the Author:
Vishal Virani is a Founder and CEO of Coruscate Solutions, a leading FinTech app development company. He enjoys writing about the vital role of mobile apps for different industries, custom web development, and the latest technology trends.