The Impact of Fin Tech on Bank Management
CHAPTER ONE
PREAMBLE TO THE STUDY
Introduction
FinTech firms have developed considerably over the past two decades, resulting in enormous implications for conventional financial institutions and massive changes to the way financial services are provided (Juengerkes, 2016). The financial services industry has entered a new phase when new entrants significantly influence the status quo, and numerous challenges and risks are on the horizon (Lines, 2016). New entrants to the financial services industry have raised concerns about the long-term viability of established players since they provide similar products and services at lower costs.
The present and future effects of FinTech firms on financial institutions focus on this research (Courbe and Lyons, 2016). It is also a goal of this study to learn more about how current and future incumbents deal with the consequences of new entrants and the issues that face them. Therefore, this paper is carried out on the impact of fintech on bank management.
LITERATURE REVIEW
FinTech can be defined as financial solutions enabled by technology that goes beyond the traditional scope of financial services provided by banks and encompass the whole spectrum of commodities (Dorfleitner, Hornuf, Schmitt, & Weber, 2017). It is also described as a new monetary service exchange that combines IT with monetary services, including remittances, payments, and asset management (Lines, 2016). Companies in the financial business use technology to improve the effectiveness of the monetary systems (Dorfleitner et al., 2017).
There are better methods of doing business nowadays because of the rise of technology (Courbe, 2017). It was suggested by IOSCO (2017), that ICT has brought about a fundamental shift in the standards of performance and delivery of services in the banking industry. Banks have invested heavily in technology to take advantage of global expansion, enhance the supply of client services while reducing transaction costs, and adopt financial technology networks to deliver a comprehensive variety of value-added services. Improved manufacturing and monetary advancement may be spurred by financial technology at the company’s intensity (Ernst, 2014; Haddad & Hornuf, 2016). By reducing the expenses of trading for the banks, financial technology makes commodities more accessible and affordable (Dorfleitner et al., 2017).
Although banks are adjusting to a digital world, fintech competitors are gaining on their operations.
FinTech is an umbrella term for the applications of information technology innovations that contribute to providing an innovative financial solution; meeting the needs of improving business processes, cutting costs, increasing efficiency while also increasing flexibility; boosting rapidity, and developing innovative solutions (Skan, Dickerson, & Masood, 2015). In this context, FinTech might be seen as an offering from an established business or a new venture (Dorfleitner et al., 2017). Several studies have confirmed that FinTech companies combine financial and technological innovation to provide a new type of financial service by using technology innovations. However, some studies go further by relating it to the digitalization of the banking sector on a global scale, as IOSCO (2017) link it to FinTech start-ups; others link it to FinTech innovation on a local level (Ernst, 2014; Haddad & Hornuf, 2016).
As stated by both Schindler and Pullaro, there is no consistent and comprehensive definition of FinTech. However, they both accepted the explanation by the Financial Stability Board in 2017 (Financial Stability Board, 2017) “technologically enabled innovation in financial services that could result in new business models,” “applications, processes, or products with an associated material effect on financial markets and institutions and the provision of financial services,” (Juengerkes, 2016).
Research method
There are two main methods for collecting data: quantitative and qualitative.
This paper employed the qualitative method. The qualitative method is defined as “non-numerical data or data that have not been quantified” (Dorfleitner et al., 2017). It is used to acquire a deeper understanding of the nature of the problem (Juengerkes, 2016).
Thus, the qualitative method is a more appropriate method for our study since it enables us to acquire a deeper understanding of the impact of FinTech on bank management, and the experts within the financial sector will allow us to obtain highly valid and rich data.
REFERENCES
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