Why Competition in Fintech is Great for the Marketplace

by | 28th September 2016 | Fintech |

Why Competition in Fintech is Great for the Marketplace

Competition in business is an essential ingredient to success. Without it one business tends to monopolise the marketplace and the service received by customers tends to become poor over time.

In the financial sector the biggest banks have been the main players for years and now with the fintech industry disrupting the market consumers are starting to benefit from innovation.

According to a report by Accenture, global investment in fintech ventures tripled in 2014 to $12.21 billion, so there is an ever-increasing amount of fintech firms occupying the market.

With so many options to choose from, surely it just makes it harder for those finance-based businesses to begin their technological innovation?

Well actually no.

In fact, the opposite is true. The more competition there is in the market the better it is for businesses wanting to innovate.

There are many fintech competitions, incubators and accelerator programmes, such as FinTech Innovation Lab London 2017, which are nurturing fintech innovation. These are an ideal place to spot the hottest talent in the fintech world.

But if you’re struggling to see the benefits of increased competition in fintech, here are three:

1) Competition Breeds Innovation:

If there are a number of businesses occupying one part of the sector then naturally they will all be vying for position, and will all be desperate to stand out from the crowd.

This can already be seen in the banking sector’s response to PSD2. As we mentioned in an earlier post, those banks that act now will have a head start on the competition.

Put simply – as one bank begins to respond to the new legislation, others follow suit to keep up.

2) Competition Drives Down the Cost of Innovation:

With more fintech firms competing for business the supply-demand issue becomes less important, and those companies looking to innovate are able to secure competitive rates for their projects.

Because businesses always want to stand out in the market, the only option left to them may be to reduce their costs.

But an important thing to bear in mind here is that you may be saving money in the wrong place if you purely go on price – so get a broad range of quotes before starting any new innovation project.

3) Competition Makes Businesses Focus on Their Customers:

Having to compete with other players in an increasingly busy market means that it’s essential for fintech firms to keep their customers happy.

Here at Trusek we use an approach that puts you in control of your project.

Our consultative approach is gaining traction in an industry becoming increasingly crowded.

If you would like to get in touch with us for more information about how we can help with your banking platform or proposition, whether an established bank, an emerging bank, a community bank, a credit union or even a new concept bank, email hello@trusek.com or call 020 7048 0470

 

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