With the steady increase of Fintech start-ups, is there a sense of reliability with these financial services? How trustworthy are fintechs in general? Do they have any regulations like a bank?
These are challenges that fintech companies have to hurdle, when proving to consumers that they are a reliable source. And it all starts with transparency.
We recently interviewed financial technology expert Rocky Motwani, president and cofounder of Jiko. We discussed how fintechs try to become a trustworthy financial resource.
Here are the highlights from that interview.
What are the advantages of having banking transparencies?
We think that transparencies have been the biggest hindrance to innovation in the industry, when in reality, they could be a huge asset. The financial service value chain is so complicated, taking parts for itself and giving some to the consumer, and there’s a problem with that. Consumers need to know where their finances are going and that it’s being used properly. Now, the technology seems to be there but the mindset and the willingness to create the transparency for customers can sometimes be too big of a challenge.
How has the view of acceptance changed from where it was, to where it is going?
CurrencyCloud is making a dent in the acceptance of fintechs, and building that reliability because they are showing that transparency. Previously, we’ve seen some financial institutions take a deeper look at how transparent they are with their customers and realize that the consumers put a lot of trust into them. With that being said, there needs to be that transparency with the funds, and it needs to migrate into the fintech industry to become a reliable source.
“We need to address the problem of transparency in fintech. Consumers are demanding it and businesses are demanding it.” – Rocky Motwani
Our awareness as consumers have evolved, and we are wanting more and more transparency not only in the fintech world, but in the financial industry as a whole. There’s a need to keep driving and creating this transparency, which brings a new building block for the financial landscape.
Where do you see the trust and relationship between the banks and their products?
People work hard for their money, they hold it dear to them – so they want it to be in trusted hands. A regulated financial institute is what fintechs long to be – that “trusted bank”.
A common misconception is that people will pay higher fees to store their money in a bank they could trust, that they wouldn’t misuse their funds, and that’s just not true. People want their money in a regulated financial institution. And know that they are meeting the regulation standards.
Is there any traction with global fintechs that can build relationships?
There is a clear market demand for it, that’s for sure. Currently there’s a long list of customers and businesses that are trying to partner with Jiko.
“There’s a need to create transparent, simple financial services built on cutting edge technology that really delivers its value.” – Rocky Motwani
There’s no shortage in demand, but there needs to be the right regulations in place and the right controls in place. The objective isn’t to just get a lot of users, but to make sure that it’s regulated and done right. There’s a long way to go with businesses and customers that want this.
How do you see the regulation side of things, with fintech being viewed as a financial institution?
Regulation in the industry is good. Most companies that start off as a tech company don’t like to move into the banking industry, because the regulation doesn’t only encompass the banking but every aspect of the business. Jiko starts off as a banking company that moves in the direction towards fintech. Regulations are needed because it builds trust, the right framework, and the right practices within the company. These regulations exist to manage within the industry.
There isn’t a need to make new regulations, but there is a need to lower the bar for new fintech startups to get the foot in the door properly. The most practical way, is to take care of getting regulated from day one to make it easier, so don’t need to rely on their partners for the licenses. When fintechs rely on partners for regulations and licensing, they tend to conform to the partners’ standards instead of their own. It makes it difficult to run your own business if you are being controlled by the ones that have the license and regulations.
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