How Fintech Startups Are Transforming Retail Banking and Finance
By Amy Neale, Mastercard
Fintech startups around the world are designing a digital future by facilitating commerce that is centered on consumer choice and experience. In fact, in 2016 more than 1,500 of them applied to Mastercard Start Path Global—our effort to support later-stage startups that are reshaping the future of finance and commerce.
Three years of evaluating startup business models and listening to pitches has given us great insight to just how impactful fintechs will be in transforming banking and commerce. Here’s what we’ve learned.
The Future of Banking Is Mobile
Startups are cherry-picking banking services and offering consumer experiences that will appeal to early adopters and digital natives. The majority of the mobile-only banking offerings are targeting a generation that expects to manage their finances without having to step into a physical branch. Younger customers, through years of experience with online and self-service solutions, have grown used to the way technology can reduce the need for human gatekeepers to ensure accuracy and manage data.
A great example of this trend is Start Path participant Moneytree—the popular Japanese personal finance management app that enables consumers to manage personal assets and corporate expenses all via mobile. Beyond being simple to navigate, its sleek design contributes to a positive user experience.
Fintech Startups Have Eyes on Millennials
It will require more than convenience to engage millennials in banking. Of the 1.8 billion millennials worldwide, nearly 33 percent of them think banks may not be needed at all in the future. That’s likely because they’re jazzed by the savviness of digital giants and curious about what more can be done with advanced technology.
Start Path startup PayKey designed the world’s first payment keyboard that bridges the gap between applications and social networks to make banking easier and more efficient. With PayKey technology, bank partners can offer their customers a peer-to-peer payment option through any social or messaging platform.
Commerce Is Getting Chatty
The industry’s desire to make finance as easy as texting is rising quickly. So quickly that we are also seeing a surge in conversational commerce which allows consumers to directly interact with banks and merchants via messaging platforms. Nearly 60 percent of U.S. millennials said they have used a chatbot, according to a 2016 survey conducted by Retale. More than half of those who had never used a chatbot said they’d be interested in trying one.
Kasisto, the Start Path participant that invented the conversational KAI Banking artificial intelligence platform, is working with Mastercard to pilot a bot for banks that enables consumers to transact, manage finances, receive contextual offers and learn about benefits via Facebook Messenger. We expect that consumers—especially millennials—will enjoy the intuitiveness of finding out how much they’ve spent on food this month or when their phone bill is due within seconds of messaging the bot.
Though these fintech players are off to an impressive start in paving the way to a new generation of retail banking and finance, we think 2017 will be the year in which they will execute the partnerships they’ve been cooking up with banks over the past few years. They’re also just getting started. Mastercard recently announced the five latest fintech startups it will collaborate with on creating new experiences using a variety of technologies, and encourages qualified startups to apply for a spot in a future wave.
Amy Neale is the global lead for startup engagement at Mastercard who spends her time getting new technologies into people’s hands. More specifically, she leads a team of former founders, techies, financial services gurus and startup fans to identify, mentor and partner with startups from across the globe to build the future of commerce together.
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