How Are Fintechs Helping To Develop Specialised Offerings?

When exploring the market, today’s consumers are faced with a greater variety and choice of financial service solutions than ever before.

New and engaging products are available both at online checkouts and in the real world, with popular new offerings like Buy Now, Pay Later (BNPL) fast becoming a staple of the modern payments experience. 

In recent years, financial services (FS) companies have undergone seismic changes, with the rate of innovation skyrocketing and consumer expectations rising along with them. There is a clear correlation between this meteoric rise and the sudden profusion of fintechs, challengers and neobanks that have taken the market by storm in recent years.

So, what is it about the fintech boom that has catalysed re-invention for financial services firms? Why has their proliferation sparked a revolution in everything from payments and accounts to embedded solutions and novel credit products? And what has enabled these small and numerous players in a highly technical and challenging space to mobilise and grow so quickly? 

Form and function

In a sense, a fintech’s size can be one of its greatest advantages. Being smaller and more agile, particularly in the start-up stage, allows them to get things done quickly. They aren’t hampered by their scale, and they don’t suffer from the delays that come with the many moving parts of monolithic legacy institutions. This agility is a key part of what has enabled them to bring so many new concepts and ideas to market in such a short span of time. 

Many fintechs are founded around a single idea – a previously unidentified gap in the market that is crying out for a specialised solution. Given the many investment programs and incubators available to young entrepreneurs, those with the best ideas have been able to scale up quickly and bring their offerings to the mainstream, further stimulating the outpouring of innovation.

The success of this model of incubation and investment is proven by the staggering annual growth rate of the global fintech sector (25%) and its forecasted valuation of more than $300 billion. New fintech unicorns are crowned regularly, and the march of progress shows little sign of stopping. 

By their nature, these upstart start-upschallenge pre-established financial institutions as they are not bound by the same protocols and historic direction as their larger, more deeply rooted counterparts. That is not to say that incumbent banks have been shifted out by fintechs. Quite the contrary, by raising consumer expectations and making innovation table stakes within financial services, they have badgered the old guard into rejuvenating their own offerings and becoming more current. 

Finally, advances within the underlying technology behind fintechs have made these firms more driven and efficient – and crucially, able to bring novel products and solutions to market in record time. A secret force behind the fintech boom and its corresponding wave of new products and services is, in fact, banking-as-a-service (BaaS). 

The ace up the sleeve

For a fintech company to deliver comprehensive and versatile products like embedded insurance, BNPL and personalised accounts, agility and entrepreneurial spirit alone would not suffice. The technical and regulatory complications surrounding banking products pose significant challenges – meaning that expert solutions are required. 

BaaS is what enables the fintech-driven innovation within today’s financial services to continue at pace, and many prominent fintechs have a BaaS partner to thank for their success. BaaS solutions – powered by core banking APIs– make it possible to deliver products that integrate with different platforms, connect seamlessly to users’ own banking services and ensure reliability and safety throughout any transaction. 

But BaaS isn’t just for fintechs – it also helps legacy and challenger banks to improve their offerings. BaaS providers like Yobota can work with many banks to allow them to bring new, best-in-class products and services to their users without having to go through the lengthy, challenging and costly process of developing the products themselves, or building a core from the ground up.

In conclusion

Fintechs are the catalysts for change. Not only do they create their own products and services that add value to consumers, but they also encourage longstanding institutions to re-evaluate their offerings. 

Fintechs are the driving force for innovation in today’s FS ecosystem, and BaaS providers are giving them the support they need to offer new and engaging products to all. Together, consumers can continue to enjoy a broad slate of innovative financial products integrated into every part of their online experience. 

About the author:  Ion Fratiloiu is Head of Commercial at Yobota.  From launching his financial career at Deutsche Bank, Ion spent a number of years consulting in the equity capital markets space and leading sales growth for FTSE500 company Fiserv and core banking provider Thought Machine. He joined Yobota in 2021 to launch its commercial operation, leading GTM strategy and building a diverse and multi-faceted team to take the company to the next stage of growth.     

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