Vision of Fintech: Evolution of the Financial Services Industry

After the financial meltdown of 2008, the emergence of cloud technology and the proliferation of open source software started a revolution in financial services technology. It’s an exciting and transformational time for our industry!

The increasing number of tech startups and the continuous international expansion has seen unprecedented investment in fintech, which was up to 12.2 billion in 2014. The digital technology revolution is re-energizing the financial services industry and opening doors to new opportunities unlike years ago.

Chris Chen, Senior Vice President and General Manager of the API team at Envestnet | Yodlee delivered the keynote speech at the 2015 Fintech Startups Conference. He gave a compelling description of the state-of-the industry as well as some tremendous insights about where fintech is headed.

He explained how e-commerce has evolved into a personalized, more social experience. We have gone from a one-store model to a more concierge, flash store, and/or marketplace ecosystem. He expects this same type of transformation to influence fintech. We are on the cusp of these amazing technology driven innovations.

Chris reinforced that the beauty of being a company with API model is that can we stay neutral. Yodlee® Interactive powers some amazing companies across many different financial apps. Many of our customers embody the simplicity and the optimized user-friendly experience that consumers have come to expect. For example:

  • Personal Capital has thousands of customers and manages over $1 billion in investments in order to help them make better decisions regarding their financial condition.
  • Honest Dollar has focused on the largely under-served small business marketplace, where they provide business investment products.
  • Roostify is tackling the mortgage business by taking the traditionally complex process of buying a home and turning it into a streamlined, instant online process. Roostify is simplifying applications by compiling user data in real-time.

Banks have always been and always will be a safe haven for money and data. This is what banks are really designed to do. However, Chris hypothesized that we can expect to see a lot of changes in how they operate. Up to now banks have not been very consumer-centric, and that is now changing.

The need for banks to cut back on expenses while taking advantage of growth opportunities is creating dramatic change. These shifts are driven by advanced digital technologies, stricter regulations, tougher capital requirements, and the adoption of socialized and personalized consumer experiences. It has become increasingly more difficult to meet these consumer demands in-house. Banks have lots of room to partner and invest in ecosystems, they will leverage innovation opportunities through strategic partnerships rather than doing everything themselves.

Chris predicted that venture capitalists and entrepreneurs globally will continue to focus on fintech. We are still in the early stages of disruptions. As the investment money grows, we will also see increasing consolidation among industry players.

There will continue to be a lot of money available for the next generation of startups and existing incumbents will leverage innovation opportunities through strategic partnerships. To learn why fintech companies and financial institutions need each other to survive and thrive, check out this Fintech Rising eBook.

Customers can now have one view across all of their accounts. Banks can also get a comprehensive view of their customers, in order to design enhanced products and meet the demands of their mobile e-commerce savvy customers.

As Chris emphasized in his talk, “It’s not actually a revolution…it’s an evolution.” Fintech has evolved in extraordinary ways and our team is excited to help accelerate financial data innovation globally.

Are you building a financial app that could benefit from access to transactional data? Developers are welcome to try our test drive tool. Learn how Envestnet | Yodlee APIs power many of today’s cutting-edge, cloud-based digital financial services.