Fintech ecosystems are complex and ever-changing, but with a clear understanding of their functions, companies can successfully navigate these. Fintech ecosystems have rapidly evolved to become one of the most critical aspects of the financial services industry. But what are they, and why are they important?
What are fintech ecosystems?
Fintech ecosystems are collections of organisations working together. In financial services, this usually refers to the development of new technologies to disrupt the traditional banking sector. It can also mean improving economic growth and social inclusion for more people worldwide.
There is also a second type of fintech ecosystem in the form of machine to machine (MtM) ecosystems. MtM ecosystems consist of computer networks that can connect through APIs or other digital interfaces, which allows them to share data and services. The hybrid of the two types of fintech ecosystems mentioned above is the most common and refers to a system where both human and machine interaction occurs.
Fintech ecosystems improve the industrial development of the industry by providing an environment where fintech companies, financial institutions and regulators can collaborate. This helps improve the quality of products and services offered and allows for the sharing of knowledge and best practices.
Fintech ecosystems are changing the way people think about banking and investing across the board. Specifically, they are challenging the way we have historically thought about financial systems and offering new ways for people to engage with money. Fintech ecosystems provide choice in the financial services sector by allowing more people and companies a voice in its development. In turn, this can help drive innovation and inclusion in the sector, which can positively impact economic growth.
In the UK, the fintech ecosystem is thriving. This development is thanks to a supportive regulatory environment and a culture that embraces innovation. Venture capitalists have also invested a lot in the UK’s financial technology sector, which has helped attract foreign talent and fuel development.
The past years have shown not only how important the fintech sector is for helping consumers and creating jobs, but also how it can underpin many other industries like retail and hospitality, supporting them in times of need. This includes enabling online ordering and payments, supplying alternative lending options, or enabling a small business to manage its cash flow better.