The global pandemic of the COVID-19 virus has already affected the financial services industry. The disease has cost many people their income, and this has put financial advisers and investment services on the back foot. Meanwhile, insurance companies are grappling with increased health-related claims. In such a time of uncertainty, companies in all industries need to adjust their strategies. That is where fintechs enter the picture. The evolution of fintech has made financial services more complex, but it also has a number of benefits.
Economic growth
In addition to its role in innovation, the financial sector plays a key role in economic development. In Asia, the financial sector is vital in supporting the development of the country’s economy. However, it is difficult to establish whether the relationship between the two is causal. But, there is strong evidence to support this relationship. The study by Rajan and Zingales provides some valuable insight into the relationship between economic growth and financial services. They found that industries that were highly dependent on external finance grew faster than their counterparts in countries with well-developed financial markets.
Competition for talent
As the financial services industry evolves, it is necessary to consider new ways to attract and retain talent. Traditional methods of judging candidate readiness should be reconsidered. While asset managers are increasing their investment in talent acquisition, private equity firms are struggling to fill their talent needs. Meanwhile, the COVID-19 pandemic has affected the supply of overseas talent and Brexit has made it more difficult to recruit talent from mainland Europe. However, there is no need to give up on the idea of hiring people with a higher educational background.
Complexity of the industry
The growing complexity of financial services firms is an essential challenge. While it is desirable to cater to a large number of diverse customers, this goal can lead to excessive complexity. The desire for more features and services can stifle creativity to create better products. This in turn stifles the once agile organization. This report outlines five key sources of complexity. These sources include regulation, product proliferation, geographic expansion, and channel proliferation.
Impact of fintechs
The impact of fintech is transforming how consumers view financial services. Digital, mobile and personalized products are the norm, and consumers increasingly expect speed and convenience from their financial services. Fintech can deliver on these demands with ease and speed. It also empowers consumers to take charge of their financial lives, providing them with better choices and increased control. In the next decade, fintech will change the financial services industry, as it continues to disrupt the traditional banking industry.
Challenges for financial institutions
There are many challenges facing global financial institutions today. Globalization, language barriers, political landscapes, and corporate structures compound the issues. The bank’s role as an employer, investor, and lender can be different in different countries and sectors. Legal obligations in one country may hinder the flow of information to a different country. Regulatory matters can also complicate the situation. However, the challenge of a growing global economy is only going to grow more difficult if financial institutions work with the right partners.