Like most things that arrive suddenly and unexpectedly, the wave of financial technology startups that appeared at the start of the decade was met with skepticism, apprehension — even contempt. This so-called Fintech Revolution threatened to take down the financial industry in the same way that ecommerce had disrupted traditional retail so many years before.
It’s only natural, then, that these two maverick tech industries have become something like brothers in arms as they battle against the old guard. Fintech is still in its nascent stages and continues to be widely misunderstood — by many online retailers as well as the wider population — but it presents a multitude of opportunities for merchants and has tremendous potential to propel ecommerce to new heights.
Savvy merchants who pay attention to the technological innovations being developed by fintech companies and, more importantly, the customer-centric principles behind them, should be able to find ways to make the same methods and strategies work for their own businesses in the near and not-so-distant future. Below are a few of the reasons why online retailers should closely watch the dynamic fintech space in 2018.
The digitization of financial services
Financial publisher Morningstar recently described the fintech industry as being made up of companies “that leverage new technology to create new and better financial services for both consumers and businesses. It includes companies of all kinds that may operate in personal financial management, insurance, payment, asset management, etc.”
Mired in traditional thinking and legacy practices, the aforementioned industries throughout the financial services sector were — prior to fintech — notoriously ineffective in establishing digital relationships with their customers. The rise of fintech, however, has changed that, forcing even the most rigid banks, insurers, mortgage lenders, and wealth management firms to realize that fintech can provide valuable customer insight the firms lack.
The threat of fintech has created a major shift throughout financial services and, by adopting fintech technologies and strategies, the sector has for the most part finally learned how to digitally connect with, engage, and keep their customers. Fintech essentially introduced ecommerce to financial services, and it is worth watching how these industries continue to expand their online capabilities by using some of the methods below.
Improved payments options
The common denominator between fintech and ecommerce best known among merchants is the digital payments industry, without which online retail could not exist. Thanks to innovations by fintech companies, consumers now have more options than ever to complete their online purchases in real time, from virtually any device, anywhere in the world, using a variety of currencies, with more digital transactions than ever being completed — faster, easier, and more securely by the day.
Mobile wallets, point-of-sale credit, faster payments, cross-border ecommerce, blockchain, and cryptocurrencies are all the result of emerging fintech technologies that continue to improve at warp speed and offer unlimited potential for online retailers. Merchants who keep a blind eye to these developments and who do not have a reliable, trustworthy payments processing partner to help them navigate this space will quickly fall behind.
Increased security measures
In addition to making payments faster and easier, fintech is largely responsible for making them more secure and continues to make great strides in this area. One of the biggest drivers behind the industry is biometric technology (the use of fingerprint, facial, voice, and retinal authentication) and its application toward more secure payments.
While fingerprint recognition is a basic feature of today’s iPhones, the use of biometrics to verify ecommerce payments has yet to be used outside of the testing phase. Merchants who yearn to offer their customers more secure payments processes would be well advised to follow these developments closely this year and, again, to be sure to make it a topic of discussion with their payments processing providers.
Automated customer service
One of the biggest favors fintech has done for financial services industries was to teach them the importance of customer service in an increasingly digital world. For years, long after the rise of ecommerce, banks and insurers relied on their physical, brick-and-mortar presence to communicate with and serve their customers.
The threat of fintech forced these industries to change their thinking and their ways, and while digitally connecting with customers has long been the foundation of ecommerce, fintech companies are developing new methods of which many merchants may be unaware. One such method is the use of chatbot technology that delivers an automated approach to customer service. Chatbots can provide online shoppers and merchants with additional lines of communication, and the latest chatbot developments are being made toward personalizing their services for customer personas or, potentially, individual shoppers.
Faster delivery methods
Fintech hardly invented drone technology but engineers within the space are working toward perfecting it as a viable means of product delivery. To date, drone deliveries have not graduated past the testing phase, most famously by Amazon, which hopes to make it a reality by offering it to customers by the end of this year.
The major hurdles thus far in drone tech development have been drones’ inability to withstand significant weights and travel significant distances. Most merchants are already intently watching this space; don’t be surprised if the game-changer comes from the fintech industry.
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Jared Ronski is principal at PayArc and works with merchants to ensure they are paired with the right merchant account for their specific business needs.