Fintech, financial tools for everyone
How technology is revolutionising the relationship between citizens and finance, making services simpler, faster and more efficient. The effects of the pandemic and the application of the PSD2 directive are driving the growth of digital payments
Published on 12 October 2020
Fintech (Financial Technology) is the process of technological innovation that is already revolutionising the world of finance and which is being applied to very diverse fields. These run from blockchain to IT security, from algorithms to financial consultancy; and to the new payment services from non-financial operators permitted by the new European Payment Services Directive 2 (PSD2).
First the lockdown, then forms of social distancing, could well prompt a rapid evolution in the technology applied to finance on both the supply and demand sides. Consob (Italy’s Companies and Exchange Commission) said as much in a recent report, according to which Fintech in Italy could see a surge in the coming months.
According to Consob, after the pandemic not only will banks and financial market participants seek to “remodel and adapt their business models to fit the new trends in a timely and efficient way,” but there could also be “a rapid acceptance of the technology by users and a growing propensity for using digital channels and platforms.”
Such forecasts give grounds for hope of reversing the trend that currently sees our country lagging behind when it comes to electronic payments, where we are today at 24th place in Europe.
Fintech and innovation: new opportunities for everybody’s daily lives
The spread of Fintech into daily life can represent a huge opportunity for citizens to significantly improve their quality of life. Just think of the new payment services through smartphones (mobile payments) and contactless payments that ensure simplicity, speed, flexibility and convenience. The customer is always at the centre of the entire experience, which ends up being much more user friendly, something that is typical of the platform economy, from food delivery services to e-commerce.
Generally speaking, Fintech makes financial and banking processes more efficient when compared with their traditional alternatives, increasing competition and transparency. The European PSD2 directive, which has been in force in Italy since September 2019, also authorises “third parties” – i.e. private companies – to carry out operations on their own behalf. This means that it is possible to make a payment on an e-commerce website without inserting the data from your own credit or debit card because it will be the vendor that directly accesses your account, having received prior authorisation. The purpose is to clamp down on IT fraud and make transactions more secure.
Fintech, moreover, can create personalised solutions tailored to people’s needs and lifestyle habits (just think of the insurance sector), while technology makes it easier for companies and start-ups to access digital loans and crowdfunding to finance new projects.
The spread of FinTech in Italy
According to data from Milan Polytechnic’s Fintech & Insurtech Observatory collected in collaboration with Nielsen Italia, 12.7 million Italians, 29% of the population aged between 18 and 74, have used at least one Fintech or InsurTech service, with a high level of satisfaction. Those who are best informed and use these services the most are young people (89% knew at least one Fintech service well and 72% had used at least one), in particular mobile payments (14%) and chatbots for communicating with the bank (10%).
The penetration of Fintech is destined to increase, boosted by the creation of new digital services and the effects of the pandemic. Once the initial diffidence has been overcome, those who try Fintech services rarely regret doing so: simplicity, speed and convenience are factors that are just too precious to turn your back on.
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