Busting the myths around fintech services

Timothy Cameron turns the spotlight on five fintech myths that he believes are holding New Zealand businesses back.

There’s no doubt most business leaders have heard about emerging fintechs and their promise to help solve so many of our financial challenges. But ‘fintech’ is quickly becoming a bit of a business buzzword that comes with a lot of hesitation and mistrust.

New Zealand is ranked one of Asia Pacific’s fastest emerging fintech hubs and one of the top 10 fintech destinations in the region, according to FintechNZ. By writing fintechs off as too complicated and unreliable, many business leaders are missing out on a huge opportunity to add value to their businesses. 

So let’s take a closer look at five of the most common fintech misconceptions. .

1. “I don’t understand what fintechs do”

Although New Zealand is ranked as one of the fastest emerging fintech hubs, they’re still seen as a new concept – especially compared to banks that have been around for hundreds of years. It’s tough to reduce your reliance on banks because we’ve all established a lifetime relationship with them.  

What many business leaders don’t know is that fintechs aren’t changing how money is used, but how it’s accessed.

For example, bank transfers have existed since the 19th century, but today business leaders can transfer money to a supplier in the UK instantly using an app on your phone. It’s the same concept, but fintechs have made it much cheaper, faster and more convenient –  eliminating the need to physically visit a bank branch for most types of services.

2. “I’m not sure fintechs are safe”

There’s a common misconception that fintechs aren’t regulated, or have lighter touch regulation – especially when it comes to banks. That’s simply not true. For example, if a fintech wants to provide payment solutions, it needs to follow the same rules banks follow to prevent money laundering. This extends to rules regarding online contracting, false, misleading or deceptive representations, and unfair practices. 

Today, many banks and other financial institutions have also integrated with fintechs to provide customers a more seamless experience. Fintechs are establishing themselves not only as significant players in the industry, but also as the benchmark for high quality financial services. 

3. “What about data protection?”

While it can seem scary at first to trust an outside source with financial data, the truth is all financial services companies collect and store personal information. 

The advantage for fintechs is that they are better at using the latest and most advanced technology to protect that data. This means they can not only give businesses peace of mind, but also ensure they’re staying on the right side of all regulatory requirements. 

While businesses should rightfully be concerned about their personal information, it shouldn’t hinder their decision to try regulated fintech products or services. Business leaders can also take a proactive approach by selecting fintechs that offer robust privacy policies and encryption. 

4. “Fintechs are too complicated”

This couldn’t be farther from the truth. Fintechs exist to solve problems by improving existing services. This means a customer-first approach – a strong difference compared to banks that struggle to deliver simpler, convenient, transparent and personalised services that is now expected.

For example, TransferWise shows real exchange rates with no markups or hidden fees and even goes a step further to show consumers when other providers might be cheaper. Transparent fintechs set a new standard for what consumers should expect. 

Fintechs not only say they’re focused on customer satisfaction, but take serious steps to continually improve it. One key important metric fintechs use to measure customer satisfaction is Net Promoter Score (NPS). It’s simple and provides a clear view of how customers view your service. 

5. “Fintechs come and go”

More and more fintechs are immerging not just in New Zealand, but globally. In the case of digital payments, for instance, they continue to be built into services instead of being offered as a standalone product. As a result, many large banks and other financial institutions are actively partnering with fintechs to extend those services to their customers. 

Fintechs aren’t going anywhere thanks to their ability to deliver valuable enhancements to banking services, and in some cases, replace banking services completely. Given the fast pace of innovation, Kiwi businesses will continue to have plenty of reasons to embrace the convenience and added value fintechs can deliver. 

Article supplied by Timothy Cameron (pictured), New Zealand country manager for TransferWise – a fintech company providing overseas money transfers.