To date, internet or mobile services become significantly in people’s life. The financial services (FS) industry is no exception; the digital revolution is transforming the way customers access financial products and services. Although the sector has experienced a degree of change in recent years, the constant penetration of technology-driven applications in nearly every segment of FS is something new. At the intersection of finance and technology lies a phenomenon that has been accelerating the pace of change at a remarkable rate and is reshaping the industry’s status quo – it is called FinTech.
FinTech is defined as a dynamic segment at the intersection of the financial services and technology sectors where technology-focused start-ups and new market entrants innovate the products and services currently provided by the traditional financial services industry. According to International Trade Administration (2016), Global FinTech activity has increased substantially in the last couple of years but remains significantly concentrated in the United States. Goldman Sachs forecasts that ultimately $660 billion in revenue could migrate from traditional financial services to FinTech payments, crowdfunding, wealth management and lending.
In details, there are several factors explaining Fintech’s emergence as a growth sector. The first factor is from the growth in technology, including social networks, big data analytics and mobile access, which leads to the willingness of consumers to share experiences and the desire for very specific information characterizes the millennial demographic. Regulation is the next factor affecting the development of Fintech. In details, FinTech companies are benefitting from changes in the competitive and regulatory landscape after the 2008 financial crisis. Larger, more-established financial services providers, particularly banks, must comply with additional regulatory and capital requirements that are at present not required for FinTech companies. This helps to reduce the cost and make it cheaper to provide particular services or reach certain market niches.
As Fintech is growing, the range, volume and value of personal information being stored online continues to increase exponentially. Therefore, companies and government authorities are trying to develop more convenient and secure means to access that information, allowing people to organize their lives digitally without hassle of fear of fraud.
The proliferation of Fintech business especially for online payment raises increasing awareness of security threats and biometric technology has been emerging as an effective tool to increase the security as well as efficiency of the adopter’s operations including banking institutions. With the average banking customer handling a wider range of financial transactions online through desktop and mobile devices, the need for easy and safe access to their banking data is becoming a top priority for banking service providers wanting to differentiate themselves from their competitors. According to YouGov surveys, nearly as many banking consumers now prefer fingerprint recognition (31%) to gain access to online banking as would prefer passwords (32%). However, in the future, iris scan will dominate due to the inherent benefits that are included such as lower lase acceptance and false rejection rates than fingerprints. Moreover, consumers in Fintech industry are seeking for access methods, which brings more convenient than remember lengthy passwords and security questions but without compromising security. In other words, biometrics-based solutions satisfy both of these criteria and look increasingly attractive as the two-step verification process favored by many major banks of using hardware and software OTP tokens is becoming outdated and remains susceptible to phishing and malware attacks. According to Garland (2016), in the last 2 years, there has been an explosion of solutions from Fintech companies looking to adopt and integrate biometrics and fill this hole in the market. Some newcomers have succeeded with this model such as Apple Pay, Venmo and Dwolla.