Lessons Learned from the emergence of Fintech startup companies in Financial Services Industry

In recent several years there are so many fintech (financial technology) startup companies were born in many countries in the world such as China, Hongkong, India, Singapore, Malaysia, Indonesia, etc. Why do they emerge and can be existed until now? What lessons learned can we take from this phenomenon, especially lessons for the existing financial institutions ?
The answer can be found as below:

1. Startup Fintech emerges and thrives because people's needs have not been fulfilled yet by traditional financial institutions.
2. The people's needs that have not been fulfilled consist of 3 things:
• First thing is the consumer segment that are not feasible to use the financial institution's services. For examples: people that don’t have savings account, not feasible to get lending from banks, the insurance premium is too high, etc.
• Second thing is the customer experiences (more usable, more practical) that are not provided by the financial institution's. For examples: impractical when people must own credit card to do payment transaction in the internet or must do transfer through ATM machine.
• Third thing is services that cannot be provided by the financial institutions by nature as the comparison of all competing financial products from different institutions. For examples: the marketplaces for comparing loans products, insurance products, etc.
3. For the first thing above, most of the traditional financial institutions intentionally does not target that segment. It's suitable to service by fintech startups.
4. For the second thing above, the traditional financial institutions have lack of customer or market orientation. They are too focused for competition and regulatory compliance fulfillment. They do not do innovations intensively.
5. The important point that the innovations must consider the people's needs. The innovations that are accepted by the market.

Summary:

Fintechs do not intend to disrupt, they cater customer’s needs that traditional financial institutions do not cater well. The lesson learned that the traditional financial institutions need to improve their customer engagements process, even to transform one either through build, buy, or collaborate in relation with fintech phenomenon.

source: my research for IDC (www.idc.com)