The internet has had a monumental impact on the growth and proliferation of fintech (financial technology) services in recent years. As internet access has become ubiquitous, fintech companies have been able to leverage online platforms and mobile apps to provide financial services to a wider range of customers.
The internet has enabled the emergence of new business models, greater efficiency through automation and data analytics, and lower barriers to entry.
This article will explore how the internet has catalysed the boom in fintech and transformed the financial services landscape.
The Rapid Rise of Internet User Growth
Back in 1990, not many of us used the internet – only around 2.6 million. By the start of the new Millenium, it was a very different story, with internet usage having grown by 396 million, a rapid year on year growth. Now, in 2024, here are around 5.35 billion people online, which is astounding.
Wider Reach and Accessibility
One of the most significant impacts of the increasing use of the internet on fintech growth is the way it has dramatically increased the accessibility and reach of financial services. In the past, accessing many financial services required visiting a physical bank or brokerage branches, which limited options based on proximity, especially for people living in rural locations who didn’t have access to a local bank.
The internet has allowed fintech firms to provide services directly to consumers across geographic boundaries. Customers can now easily access financial services online from their computer or mobile device regardless of location. If they want to check their bank account, all they have to do is open up an app. If they want to buy or sell shares, again, this can be done online.
This wider reach has opened up fintech services to underserved demographics as well, bringing affordable digital banking, lending, and investment platforms to the masses. By tapping into the internet as a distribution channel, many fintech companies have been able to acquire customers and scale at unprecedented rates.
The low barrier to entry has also spawned a wave of specialised fintech startups catering to niche segments overlooked by traditional institutions.
Automation and Streamlining
The growth in internet connectivity has also allowed fintech companies to streamline processes and automate tasks using internet-enabled software solutions. Where financial services were once highly manual and paperwork-intensive, fintech companies now utilise automated digital workflows to improve efficiency and reduce overhead costs.
Processes like customer onboarding, identity verification, loan underwriting, transaction monitoring, and record keeping can all be automated and handled digitally. This automation allows fintech firms to scale and pass cost savings down to the consumer. Advanced data analytics applied on top of these digital workflows also improves decision making, risk management, and personalisation of services. The automation and streamlining internet-based software enables has been instrumental to the growth of fintech across spheres like banking, lending, payments, wealth management, and more.
New Business Models
The internet has further enabled fintech growth by giving rise to entirely new financial business models that leverage online and mobile platforms. For example, the rise of online-only neo-banks that provide digital banking facilities without physical branch networks. The low overhead costs involved with online banking have facilitated the launch of many new digital banks.
Similarly, internet-based peer-to-peer (P2P) lending networks have created new models of direct loan facilitation between borrowers and investors online. This eliminates traditional intermediaries and overhead. Payment apps use the internet to allow instant peer-to-peer money transfers and digital wallets. The use of the internet as an enabling distribution channel and platform has thus paved the way for innovative fintech business models not possible previously.
Improved User Experience and Convenience
Importantly, the use of the internet as the core delivery medium has also allowed fintech companies to dramatically improve the user experience around financial services. New fintech entrants have focused heavily on convenient, intuitive user interfaces and experiences that engage customers across digital platforms. Features like rapid account onboarding, instant approvals, smoother payments, and personalised insights deliver immense convenience and value-adds to customers.
Incumbents have been forced to compete by improving their own digital experiences. The general shift towards customer-centricity and convenience driven by digital experiences has been a key factor in fintech growth. Consumers have embraced fintech offerings that reduce hassle and friction around financial services through thoughtful digital design.
The proliferation of the internet has been the single biggest enabler of the fintech revolution over the past decade. The reach, efficiency, streamlining, innovation, and improved user experience unlocked by internet technology has transformed financial services dramatically.
Fintech has shifted from a niche sector to a core part of the financial mainstream. While challenges around regulation and security remain, the widespread growth of fintech globally is set to continue being driven by the power of the internet. The future of finance is undoubtedly digital.
