What is the Impact of US FinTech on Banks: Ken Research

1
What is the Impact of US FinTech on Banks Ken
Research
2
The pursuit of customer centricity has become a
main priority for all sorts of financial
institutions. The digital consumers preference
for a superior customer experience, quick
response and convenience has accelerated the
products and solutions offered by FinTech
companies. Disruptive Effect Although banks
have been slow to adopt technological changes
owing to security issues, banking has been one of
the sectors that is most resistant to disruption
by technology. Retail, media and travel are three
of the many sectors that have been significantly
disrupted by technological shifts.
3
Banking had largely remained unharmed due to
strict regulatory barriers. However, public trust
and confidence in this sector is quite low
presently and banks and have been hit by
sanctions and political rebuke. Online payments
are still a cumbersome process with users needing
to type in usernames, passwords, 16 digits from
the credit card and other things. Payment wallets
and payment gateways have transformed the way
customer make payments. Consumer banking, fund
transfer and payments are the sectors that are at
high risk of disruption by the FinTech industry
in the next 5 years. Emergence of online
platforms has allowed individuals and businesses
to lend and borrow between each other.
Establishment of alternative credit models, use
of non-traditional data sources and powerful data
analytics to value risks, quick disbursement of
loans and low operating costs have allowed the
FinTech companies to flourish. Moreover,
technology driven payment processes and digital
wallets that enable easier payments have led to
increased use of smartphone and other devices to
transfer money and make payments.
4
Collaborative Effect Traditional financial
institutions are aware of their inefficiencies,
slow processes and high fixed costs involved into
every transaction. FinTech companies are not just
bringing concrete solutions to consumers but also
empowering them by providing new services which
can be delivered with the use of technological
applications. Digital services have been able to
address their needs in a more convenient way than
traditional nine-to-five financial institutions.
Although FinTech companies have been chiefly
successful in the transaction and lending aspect
of the banking industry, they have had almost
negligible effect on traditional banking
operations such as deposits and large volume
loans. It is highly unlikely for FinTech
companies to replace traditional banks and both
can co-exist in a symbiotic relationship Collabo
ration between FinTech and traditional
institutions can be an effective way to identify
challenges and opportunities as well as to gain a
deeper understanding on complementing each other.
5

• How has the Equity Crowdfunding Market Placed?
• Crowd funding involves individuals who pool money
  using a platform to fund the projects by other
  people or organizations and Equity crowdfunding
  involves trading equity of a company for the cash
  collected by the investors. Till 2015, the
  regulations in the U.S. only permitted accredited
  entrepreneurs to raise money from equity
  crowdfunding. These investors have to meet
  certain levels of wealth, established by the SEC.
  However, in the near future the SEC would make it
  legal for entrepreneurs to raise money from the
  individuals who are not professional investors as
  well.
• The major players in the market include
  EquityNet, Fundable, Angel List and Crowdfunder
  with a market share of , , and
  respectively Equity crowdfunding have observed
  rapid growth in last few years especially after
  JOBS act passed in 2012 owing to the above
  propelling factors. This is coupled with higher
  comparative regulations in collecting equity
  funds from other sources. The other important
  factor which provided an impetus to the equity
  crowd funding market is the growth of startups in
  the country and also the implication that the
  entrepreneurs can move up from seed funding to
  different levels of funding. This provides them
  with easy access to the required capital.

6

• The government has been looking forward to boost
  the confidence for the investors to invest in the
  market. The title 3 of JOBS acts regulation CF
  passed in May 2016 has already allowed the
  individual investors to invest in the market,
  further rules and regulations would definitely
  help boost the investor confidence such as the
  platforms would have to purchase a fidelity bond
  of at least USD 100,000 as insurance for crowd
  funding. However these steps will impact the
  marketplaces by increasing their operational
  costs.
• In the short run the market would incline at a
  rapid rate on the back of increased investments
  by the individual investors, pro investor
  regulations of the government and increased data
  availability. This would help the market grow to
  USD billion by 2017.
• Further in the longer run, the realization of the
  disadvantages to the unsophisticated investors,
  inclined interest rates and higher interest of
  the institutions would collectively have a
  dampening impact on the market and slow down the
  growth rate of deal values in the US Equity
  Crowdfunding space and lead the market to USD
  billion by 2020.

7
Key Factors Considered in the Report Comprehensive
analysis of the US FinTech market and its
segments Listed major players and their
offerings Identified major developments in last
few years and assessed the future growth of the
industry Government initiatives taken to
stimulate the growth of the market. United
States Market Trends Fintech Business Lending
Market Future Global Fintech Market Challenges
Fintech Market Financial Services FinTech
Industry Fintech Market Growth Top Financial
Technology Market Mobile Payments Market Money
Transfers Market United States Digital Commerce
Market Marketplace Lending Industry Loan
Disbursed FinTech
8
Companies Cited in the Report List of Major
Companies Companies Covered in the
Report Android Pay Angel List Apple
Pay Authorize.Net Chase QuickPay Crowdfunder Dwoll
a EquityNet Fundable
Major Players Lending Club OnDeck
Capital PayPal Stripe Vanguard Venmo Wealthfront
9
For more information about the publication, refer
to the below link https//www.kenresearch.com/ban
king-financial-services-and-insurance/financial-se
rvices/us-fintech-market-report/54351-93.html Rel
ated Reports https//www.kenresearch.com/banking-
financial-services-and-insurance/financial-service
s/cards-payments-industry-us-emerging-trends-2019/
3456-93.html https//www.kenresearch.com/banking-
financial-services-and-insurance/financial-service
s/north-america-mobile-money-market-research-repor
t/632-93.html Contact UsKen ResearchAnkur
Gupta, Head Marketing CommunicationsAnkur_at_kenre
search.com91-9015378249
10
(No Transcript)