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Fintech: Risks or Opportunities for Business?

FinTech Industry

The fintech industry started developing quite recently, but it has already become trendy in the world of information technology. More and more young entrepreneurs are currently launching start-ups in this area.

Just a couple of years ago, you had to visit a bank or find a teller to pay for most services. This could easily take several hours. Now, you can do it online in less than a minute. Add your credit card to a dedicated app, make one or two clicks, and everything is ready!

When you use PayPal, Apple Pay, Google Wallet, or just your credit card to carry out a purchase online, you utilize fintech industry achievements, linking consumers, e-commerce merchants, and banks together through money exchange.

What Is Fintech and What Are Its Benefits

Fintech is a new technological industry consisting of companies which use technology and innovation to gain competitive advantages over traditional financial institutions like banks and intermediaries in the financial services market. This economy branch includes start-ups modernizing such industries as money transfer, payments, loans, fundraising, and even asset management.

Generally, we can include here all IT developments implemented on the market to improve, accelerate, cost-cut, and automate financial services.

Nowadays, more and more apps also appear in related industries, such as certification and insurance. Smart contracts are the hype these days. They exclude the human factor, cannot be faked, changed retrospectively, lost, or stolen. You can read more about this innovation in our article “What are Smart Contracts and How do They Work?”.

There are many directions in fintech, providing broad opportunities. However, the majority of solutions in this area have common trends. They include possibilities to carry out financial transactions without customer’s personal attendance, to increase transactions carried out using mobile devices, contactless payments, financial services automation, virtual banking, and “artificial intelligence” utilization.

Both for ordinary users and businesses, modern technologies used in the financial sector provide such important benefits as speed, cost reduction, and customary operations automation. As a result, all these features are not only beneficial for everyone but also stimulate the economy as a whole.

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How Fintech Penetrates the World

Over the past ten years, technology has fundamentally changed the vision of financial sector work. Ubiquitous smartphones and the Internet allow creating new business models and patterns aimed at interactions between financial institutions and customers.

China (69% of the country’s population), India (52%), Great Britain (42%), Brazil (40%), and Australia (37%) are the leading countries with the largest customer bases – users of fintech services. In the USA, the fintech services penetration rate is just 33%.

Fintech world coverage
[by EY Global FinTech Adoption Index]

The conservatism of the financial sector itself is the main obstacle to further development and expansion of fintech. The high-risk operations carried out within it are the reason for this: losing assets will mean much more for a financial company customer than, for example, losing an account in some other service.

Fintech provides opportunities in the first place, not risks

Fintech is not just new technology which can be replicated or purchased. Primarily, this is the core of other business processes. Most companies in the market respond to the fintech challenge in one of three ways. However, none of them is enough to achieve success in the future:

  1. The wait-it-out technique. The point is to save the company’s resources until the moment when obvious technology winners emerge. However, such companies are at risk of being unprepared to face the circumstances when threats to their business become inevitable.
  2. The second group take the approach of purchasing fintech startups in order to gain immediate access to new technologies. As a result, they often face integration issues.
  3. The third group invests significant time and money in developing their own IT systems. They are typically fragmented and complicated by inherited systems which are difficult to maintain, update, or improve.

The best strategy for the company is to become the most dynamic fintech center itself by creating a new business ecosystem. For many traditional financial institutions, this strategy requires a fundamental shift in their structure and approach to operation. The company should become more flexible, learn to respond quickly to customer requests, and be able to implement new technological solutions as soon as they emerge.


We have every reason to anticipate that new players will come to this market as new business models and technologies develop, and the assets invested in them will continue to grow.

Generally, the world will continue to change with fintech industry development. Simple transactions will allow enterprises to provide faster services, improve customer support, and transform financial activities aiming at the optimization of most processes.

Lvivity Team

Flexibility, efficiency, and individual approach to each customer are the basic principles we are guided by in our work.

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