During a time when COVID-19 still requires various shutdowns and governments impose stay-at-home orders all over the world, the fintech industry and business, in general, are pondering big questions. On a podcast by Soar Payments, Vladimir Atanassov, a Sales and Alliances Manager at Scalefocus, joined the talk about what changes are to be expected and what unique challenges lie ahead for European banks. Below you can find the whole recording of the podcast in which Vladi discussed in depth the present and future of fintech and payments in Europe. Also, you can keep reading to see the recap of the talk.
Impact & Challenges
At the beginning of the podcast, Vladi shared a bit about his own experience - his background with working in the microfinance area, in specific and emerging markets like Africa, the Middle East, and the Asia Pacific regions. "I am familiar with trying to solve challenges connected to the financial inclusion for people who for example, had never had access to financial services due to remote location or lack of infrastructure. This exact type of work is now coming back in interesting forms in present-day Europe because we are facing a bit of remoteness in the market. This is, of course, due to the circumstances, but may become permanent in some ways."
Vladi also shared his expertise with markets in Europe and his focus on the consumer side of things. "I would say Europe is an interesting international hub for financial services and technological advances because historically, we have had a great education in the past - strong legacy in universities related to mathematics, IT. The region is a unique mix of relatively low economic standards but, at the same time, a very high level of technological skills, know-how, and drive for innovation."
Asked how Scalefocus intersects with finance, banking, and business, Vladi explained that as a software delivery center with a vast range of projects and areas, the company has dedicated practices that serve specifically the insurance and financial services for extensive vendor system.
"We have the experience to help them not just technologically but also to add value with the right skills, give them a fully holistic approach towards either an already existing digital innovation, or building completely new layers on the market. We implement core systems; we develop custom portals for clients and create something meaningful and working."
With the appearance of COVID-19, it quickly became apparent that fintech and banks in Europe will go through a catharsis resulting in change. According to Vladi, currently, there is a state of cautiousness in the market - "everybody is planning very carefully" - especially companies that provide solutions for the sector. "The interesting thing is that there is a tendency at the moment to drive everything to happen faster - for example, digitization. Even legacy organizations are getting fast-tracked immensely, and that is not a surprise."
As for the broader impact, Vladi commented that on a governmental level, within Europe, regulations are going through changes or about to be - and quite fast.
"For some countries, this is a surprise because many of the European legislations traditionally are slow and take their time with decisions. Now they do everything possible to be on track of time." What is also interesting, in his opinion, is that more and more digital organizations are looking into other challenges coming their way - the development and release of new solutions are growing immensely.
New Trends & Purposes
Vladi notes that one of the things we need to pay attention to at the moment is the client's journey. "This is something that's been talked to a lot in the past, was about to become a trend and now was fast-tracked into one." How this relates to actual fintech?
"There is a higher demand for a customized service towards their clients' needs. We are now seeing some well-known brands, even losing their loyal clientele to tailor-made brands and companies tailoring their needs to the client."
According to Vladi, a lot of loyalties are shifting at the moment. "This is something we see in fintech and financial services, too, to some extent. For example, there are large banks in Europe that held 70% of consumer lending in a specific country - they are now starting to lose their market share to more disruptive players that not only have a better offering but care about their customer's journeys. They become more modern, more acceptable and this includes a lot of integration with social networks, gamification programs, the ease of using the specific applications. This is something that is now truly rising and expanding."
Everything seems to be getting up to speed, Vladi says, and it is an exciting time, that is becoming very consumer-centric. The great need for digitization, obviously, is connected to the moment - the lockdowns and the increased demand due to the competition.
"It is almost as if COVID-19 pushed all those needs to the forefront.
It could be a kind of a two-blade sword though, because yes, it can drive faster change, but the applications must be built sustainably, with a plan. The idea is to launch something that can give you quality in the years to come and not just save the day now."
We are living in a unique time, says Vladi, and there are risks involved. When you consider the rapid expansion of regulations, governments will have a lot to sort out.
"Those innovations come from a very unexpected place - a time of crisis - and those regulatory changes will include a need for governmental innovation. We see now a drive for digitization from very central places in the European Union."
There are, of course, some concerns. One of them is that the large sharing of data and the drive for digital identities for everybody can prove risky. "I believe though that in the fintech world there are very bright and responsible minds that will use this for better services - things like consumer behavior, giving a big jump to AI, embedded banking and automated services. This is happening in a hurry now and there is also the risk of security breaches but yes, this is long overdue and it is interesting to see how it's going to impact the end customers."
Vladi gave his perspective about the security in the online working environment - that it is set to continue for many people and that there are a lot of holistic solutions (offered by Scalefocus) that can address security, even preventative.
"The security in general in my opinion is going to be driven in a model which is - subscription model or services-based model."
As for what the banking systems are going through, he admits that it can be called a shock. But one of the things he observes right now is a much more relaxed approach in lending and lending through digital channels. "And I think a lot of large banks are now transferring their focus on SME lending - I think this is going to accelerate the drive towards much more tailor-made SME lending products."
About automation - he says that it is something going alongside the other changes although probably not so critical. He shared some of the main focus points of Scalefocus and projects like Virusafe, turning the company more and more towards social responsibility more than anything else.
At the end of the podcast, you can enjoy a "rapid-fire" round - Vladi was asked 5 questions on the topic that he needed to answer very fast.
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