The fintech boom everyone projected about five years ago has already happened, thanks to the COVID-19 pandemic. In 2020, we saw new payment services emerge and now people around us have gotten used to online payments, credits and QR codes. However, apart from payments, transfers and credits, there are lots of other promising niches in this sphere.
The E.U. PSD2 (Payment Service Directive 2) allows fintech companies to get access to clients’ accounts to conduct financial operations. In other words, in Europe classic banks have to provide access to client accounts by demand. As a result, fintech services are quite convenient. I think this trend is going to expand globally. Of course, there are tons of nuances in each specific country.
Here in Kazakhstan, we have just begun to develop this sphere. Yes, we have some commercial banks that are doing quite well with payment systems and actively developing Banking as a Service. This trend will likely continue in 2023 as more banks may decide to provide better services for small and flexible fintech companies instead of competing with them.
RegTech (Regulatory Technology) is another interesting trend. Given that fintech is constantly evolving, financial institutions need services that would help them to meet requirements by central banks for better accounting, monitoring, reporting, AML, control and compliance. Moreover, fintech is not just about retail. It is also B2B and RegTech, the two promising areas that are set to evolve.
New generations, new products
Businesses always need to think about young consumers. People born over the period from 1997 to 2012 (generation Z) are used to living in a digital world. Many adults usually want to know who is an owner of a bank they deal with and what its ranking is in terms of assets, while young people just need fast and convenient internet banking. Moreover, young people are eager to be financially independent. They can make money on social media and often look for new opportunities to invest their money.
Any business that would offer them a product they want will succeed. Generation Z loves Reels and TikTok. Therefore, you need to adjust your product to their expectations in terms of both user experience and marketing.
Future of fintech
The rising geopolitical tensions have become a key driver of the increase in trans-border transfers. People often migrate from one country to another and work remotely these days. These digital nomads would be happy to get a tool for money transfers without a fee.
Our company has launched credit products in Indonesia where we have to deal with an undeveloped legal framework similar to what we had in Kazakhstan several years ago. In 2017, we were forced to deal with strict regulatory policies by the local central bank.
As a P2P service, we also deal with often changed regulating requirements. So, if you are going to work in a developing market, all you need is just to start a business and solve all those annoying problems along the way. In a developed market, you will just compete with other businesses.