Shifts in banking: Rise of fintech companies

In the past few years, the financial market worldwide has experienced unprecedented development, especially in terms of financial technology or shortly "fintech". A massive technological use within digital currencies, innovation in mobile payments, distributed ledger technology, and blockchain technology along with marketplace lending and peer-to-peer lending within the financial institutions have been observed. Subsequent growth of intake innovation has been observed outside the traditional banking and financial system that has been largely given by the non-bank entities such as fintech start-ups and emerging companies along with some non-traditional providers. With the subsequent decline of traditional banks and rising of neo-banks or fintech companies in general, the financial market or industry worldwide has been reshaping. The study evaluates the need for the emergence of financial technology services within traditional banks and tries to understand the adoption of different models for addressing new trends in the finance industry. Therefore, the study evaluates the opportunity, security, and sustainability concerns related to financial technology and fintech companies, and evaluates them within the society in terms of technological advancements. Financial technology has been utilized for helping business owners, companies and consumers managing financial operations and processes with the help of specialized algorithms and software used in computers and smartphones. Compared to the traditional value-adding areas of universal banks, fintech companies have been widely distinguished in their involvement in assessing management payments and financing. "Diffusion of Innovation Theory" has been regarded as a major theory which would be evaluated in this study. The study has followed a positivist philosophy, deductive approach, and exploratory research strategy as this type of strategy has helped the study in exploring the phenomenon of fintech in the current world and its impacts on the traditional banks and financial institutions in general. The study has implemented a qualitative research technique from both primary and secondary sources. The finding of the study represents that the rise of fintech companies has significant influence on the decline of traditional banks and financial institutions in recent times. The inability of traditional banks to effectively implement technology within their operations is the major factor that has initiated the decline of growth for them. For instance, traditional banks would need to have a greater emphasis on customer experience to compete with neo-banks. They also need to collaborate with their service providers while implementing fintech within their own organizations. As per the perspective of most of the managers of traditional banks in the UK implementing financial technology within their company can help traditional banks in generating greater revenues. The use of more innovative and digital solutions by traditional banks can help them effectively manage their risks, especially regarding to the implementation of financial technology. Keywords: banking, fintech companies, financial technology, innovation, digitalization