“Less is more” – Fintech’s impact on financial services

Once upon a time, dealing with finance would be done through a trip to the bank. Whether you wished to pay in or take out money, you could pop into your local branch where your request would be granted with ease.

But that was then and today things are different. Since its emergence in recent years, fintech has made banking simpler and more convenient. Technology means that you can handle finances with a few mouse clicks, screen touches, or even just talk to your smartphone.

As one of the marketing or advertising rules goes, “less is more”. From a customer’s perspective, the benefit that fintech brings about also manifest itself in much “less” of things compared to the past, i.e. things that we used to need are no longer necessary today. Here are some notable examples:

Firstly, “paperless”, which is one of the earliest changes fintech has caused in business. Shares trading has gone “scripless” for years, as electronic systems have replaced the needs to have paper documents. Banks have long discouraged customers to open passbook accounts, and encouraged them to opt in for e-statements. Most banking forms are now available online, letting customers fill them on a computer at home. Digital versions of commercial contracts have emerged, like what is called “smart contracts”, making use of the new “blockchain” technology.

Another almost entirely ubiquitous change is “wireless” or, a more common term, “mobile”. An average smartphone today is more powerful than the supercomputers only a decade or so past, and there are almost as many of them as people in Hong Kong. Our city has some of the best WiFi and 4G infrastructures in the world. As a result, many banks have embraced a “mobile first” strategy, focusing on wireless as the primary service platforms, like mobile banking, mobile payment and, indeed, wireless experience as well as mobile workforce.

In the same vein is “contactless”, which Hong Kong was one of the early adopters with the introduction of Octopus. Major credit card issuers have since launched contactless plastics and merchant terminals. More recently, some banks are piloting new schemes where NFC chips are implanted in bank cards and tokens, thus allowing servicing staff to identify and retrieve relevant information about the customers the moment they meet each other in branches or at client sites.

Talking about cards, there is actually an emerging trend towards “cardless”, once again thanks to the proliferation of smartphones and wearable devices like smart watches. Technology has enabled safekeeping of pertinent personal and account data in the device itself. With that information, users can securely perform financial transactions, including P2P, P2M (merchant) funds transfer, payment, ATM cash withdrawal etc. using the smartphones. Years ago a famous credit card ad went like “don’t leave home without it!” That “it” nowadays is surely the smartphone instead!

As a result of the above, one noticeable new phenomenon, especially among young affluent generations, is the shift towards a “cashless” and hence somewhat “carefree” lifestyle. Rather than a physical wallet, people can go about all their payments and purchases with electronic wallets, typically in their smartphones. This is particularly prevalent in the mainland China, where even a street hawker selling veggies features a QR code for customers to scan and pay with their phones. The local banking regulator, HKMA, has issued over a dozen e-wallet (SVF) operator licenses since last year, among them the Octopus, AliPay and WeChat. One thing is certain: Banks are not ordering more ATMs these days.

One the most distinct benefits of all fintech is that financial services can now be made available anywhere anytime; perhaps we can call it “time-less”. Gone are the days when people needed to rush to the branches before they closed, while one can follow the sun to place orders in stock markets around the world. The customer experience in using financial services has become increasingly “seamless”, and hence “frictionless”, since fintech-enabled services such as remote account opening, interactive chatbot, robo advisor, virtual teller and so on, are transforming the ways in which people bank and spend.

The writer is Michael Leung, president of Hong Kong Computer Society.