During the age of the digital revolution, where global consumers are more connected than ever and underserved communities can partake in financial inclusion due to the rapid development of financial technology services, fintech is one sector ripe with opportunity.
Globally, the fintech market is expected to reach more than $332 billion in the coming years, as the widespread use of smartphones and the internet puts more consumers in contact with inclusive banking.
Fintech Flourishes during Times of Crisis
While fintech has emerged as an inclusive solution to banking and financial requirements, SaaS or Software as a Service has risen to the opportunity, offering more scalable solutions for the growing fintech industry.
Over the last few years and more surprisingly during the early months of the pandemic, investors were seemingly bullish in terms of fintech, with billions of investments coming from venture capitalists and big league investors.
Regions such as Africa saw perhaps the most significant jump, with more than $1.6 billion invested across 153 deals in 2021, which is a 50% increase in transactions from 2020.
Generally speaking, SaaS was seen as a solution-based approach for businesses and companies looking to leverage the possibilities of cloud computing rather than having to utilize computerized software.
As demand increased, both for SaaS and fintech products, the combination of efforts and technology helped some fintech companies pivot themselves towards success, seeing massive consumer support and widespread adoption.
SaaS managed to accelerate the digital transformation of fintech services and products almost overnight. Now, it’s nearly impossible to imagine a world where fintech operates on primitive means without implementing some form of SaaS management protocols.
Yet, for many fintech companies and early startups, SaaS offers more than a standardized solution, as both sectors are looking to grow and expand interchangeably.
From scalable solutions, value-added services, increased agility and automated security, here’s a look at why SaaS is driving the fintech industry towards the future.
Increased Predictability
Fintech companies have become the virtue of financial and economic forecasting for a majority of consumers, enabling them to have convenient access to predictable models.
On the one hand, SaaS technology has enabled fintech companies to be more active in their predetermined measurements, creating a vast chasm through which these platforms can project changes in the market, and consumer habits, and build future-proof analyses based on previous performance.
Additionally, SaaS has enabled fintech-based platforms to be more focused on performance-driven models, meaning that it’s become easier for them to conduct expense management services, offer solution-based products built on current measurements, and increase market scalability through pre-determined market expansion and consumer spending.
Ease of Access to Applications
Companies and small businesses that leverage the power of Software as a Service share a common notion, accessibility to high-level software and cloud computing tools.
What this means for the fintech industry, is that companies no longer require primitive tools and technology to access the information they require to make value-driven and market-related decisions.
With access to a SaaS vendor management guide, fintechs have more freedom to retrieve the necessary data, both on an industry and personal level. These actions also filter down to user-friendliness and usability. Instead of having to make use of in-house programs, users can now access the required information and data points from nearly anywhere in the world.
The ease of access SaaS programming provides, if applied correctly can ultimately eliminate the need for internal administration. SaaS providers will ensure and oversee cloud-based operations, allowing fintech startups and companies more freedom to focus on business-related operations and functions.
Cost Incentives
In the past, individuals paid thousands of dollars to access and run basic internet applications for large-scale utilization. These amounts quickly surpassed hundreds of thousands of dollars.
With SaaS, companies, more so fintech startups and businesses can subscribe to premium plans tailored specifically to financial operations. These subscriptions can significantly lower costs for companies, allowing them more free-flowing cash to improve and upgrade current systems.
Finance merchants can now look and implement the software tools they exactly need, as SaaS is more customizable and driven towards a client-focused goal. Companies no longer require in-house or on-site software or hardware, leaving the infrastructure to SaaS providers. More so, as merchants can scale down on software costs, they can also minimize their maintenance expenditure, as this is left to their chosen provider.
Cyber and Digital Security
As already mentioned, we see how SaaS minimizes not only the cost and expenses needed to maintain and upgrade certain systems but also enhances cyber security features, which are in most cases included within basic product offerings.
Security is a crucial aspect in the finance industry, related to monetary concerns and the accessibility of consumers’ personal information and business-related data.
Hyper development and innovation in the Software as a Service field now includes using Secure Sockets Layer or SSL encryption. This means that data and information shared on the backend are encrypted and protected by multi-level security protocols, now standard practice in SaaS.
For users, there are also increased security features ranging from multi-user logins, encryption keys and two-way authentication, among others.
For financial institutions, it means that they have more control over who can access criteria-specific information and data points. For users, it adds peace of mind and a sense of security to their finances and personal information.
Market Agility
In a highly volatile consumer market, where buying and spending patterns are constantly changing and evolving, the finance industry requires constant consumer evaluation and monitoring structures.
Although it’s not a standardized practice in many SaaS applications, predictability is a crucial aspect that correlates directly to market agility.
As demand patterns change over time, from consumer behavior trends to business-related growth, SaaS services can be adjusted and customized accordingly. What this means for financial technology startups is that the applications they use can help them establish data points that can determine market cycles.
Not only can these efforts be directed towards a consumer perspective, but also on a level of internal structures.
Consumer Adoption
In the highly competitive market of financial technology, where hundreds of fintech startups are founded each year, rapid market and consumer adoption is a crucial aspect of any startup's longevity.
With SaaS applications, it’s easier for startups to acquire the necessary software tools to help fast-track their time to the market. The quicker a startup can offer its products and services in the marketplace, the easier it is to increase industry influence.
Fintechs tend to miss the important role SaaS can play in widespread consumer adoption. With less time needed to resolve internal issues related to SaaS applications, fintech startups and businesses can spend more time focussing on market needs, changing consumer behavior and internal operations directly affiliated with the business.
Regulatory Compliance
Regulatory structures differ across the board, and while most of these structures are overseen by a regulatory corporate body, depending on legislative conditions, Software as a Service can help to ensure fintech startups and businesses comply with changing regulations.
It’s a practice that perhaps carries the most importance for fintech companies looking to dominate their direct consumer market and perhaps become industry leaders over time.
SaaS providers ensure that companies follow certain mandates outlined by the regulatory body. In most instances, we see SaaS providers oversee consumer data and information protection under the regulatory landscape.
Furthermore, there are requirements that companies will need to agree upon before entering the local market and follow certain guidelines related to financial security and data protection.
Minimizes On-Site Labor
A final driving factor of SaaS applications is its ability to minimize the need for on-site or in-office labor. These requirements filter through various departments, from customer service to installation and maintenance.
As SaaS providers take responsibility for these roles, fintech companies are left to secure more time and labor focused on business-related operations and requirements.
Instead of having to spend time building solutions and assembling applications, labor consumption can be directed towards specific in-house operations that can help advance systems and services.
The Future of Fintech & SaaS
Although somewhat still in its infancy, fintech has a promising future ahead, looking to make financial services and applications more inclusive and accessible.
While ordinary systems have brought the industry to widespread adoption, so far, collaborative efforts, more so with Software as a Service, ensure the industry can provide more innovative solutions.
SaaS applications combine technology and internet capabilities, enabling fintech companies to enhance their performance and establish market-driven products without compromising on quality while driving the industry towards the future of finance.
