In modernizing the banking and investment market, the financial marketplace seems to be establishing itself as one of the products with the most splendid future.
Mainly because some of the prominent entities in our country are true pioneers, but also because consumer habits and needs continue to change at great speed.
One piece of information that gives us an idea of the importance that it may have in the current context is that, according to World Bank data, around 2,000 million people (almost a third of the world’s population) do not have access to financial services.
At the same time, most of the population has access to a smartphone or the Internet. A global consumption trend allows financial institutions to renew themselves simply by adapting the format to current times. But how exactly?
What is a Financial Marketplace, and How Does it Work?
Since the beginning of the century, with Amazon or Netflix in e-commerce or streaming, financial institutions have long been looking for innovative formulas to engage an increasingly digital audience. For this reason, especially after the economic crisis of 2008, most explored models with which to bring services together in a much simpler and more accessible way.
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Neobanks were born from that new paradigm, a new concept that brought traditional financial products together for the first time on a single digital platform.
Parallel to electronic contracting, financial entities became interested in other products focused on ‘data’ and artificial intelligence. Setting savings goals or obtaining detailed reports on spending levels quickly popularized ‘fintech’ just five years ago.
In this sense, the financial marketplace represents the culmination of digitization and exploitation of the data, a centralized space in which the user can contract products from different financial entities in a personalized way.
In other words, attending to your interests and needs thanks to the data you regularly provide: if you are looking for credit products, have a mortgage, or need insurance. An all-in-one.
The Branch of the Future
It is not surprising that the financial marketplace, due to its status as a comprehensive solution, is currently seen as the branch of the future: almost all the procedures that could previously be carried out (and, many times, were mandatory) to be carried out in person, are now possible do it from the computer or with a simple app.
Part of this transfer of services is the evolution of converging technologies such as ‘legal tech’, which allows everything from the electronic signature of documents to their notarial registration. Something beneficial to open a bank account or apply for credit online.
For this reason, in anticipation of this massive transfer from physical to digital branches, banks have begun to take an interest in the necessary infrastructures.
For example, in 2021, the Center for Interbank Cooperation (CCI) was created to reinforce the sector’s cybersecurity in the face of developing threats, and to which more than a hundred entities already belong, including BBVA, Santander and Caixabank.
Its objective is to establish an internal marketplace so that the entities and their suppliers share information on cybersecurity to create an incorruptible system.
The ‘crypto’ phenomenon also has a lot to say about the future of financial institutions: today, the blockchain is the safest system to prevent data leakage or cyber-attacks. And the best: it is easily scalable.
However, the main stumbling block is that there is still no structural framework capable of supporting the full development of marketplaces with this type of technology. In fact, for the branch of the future to become a reality, some steps still need to be climbed, especially in:
The lack of specific regulation is usually the leading cause of the slowdown of any innovation that has to do with technology. A problem that can be seen, for example, with bitcoin, but that also affects other disruptive concepts such as the financial marketplace: basically, it is a space that allows multiple products from different financial institutions to be offered in the same area. And there are many legal implications on personal data, product transparency and the very signing of documents.
Another major stumbling block of the financial marketplace is usability: today, most entities develop applications that are not yet capable of fully engaging with the user as similar comprehensive services do in sectors such as streaming.
In this sense, perhaps the most significant fundamental problem of the financial marketplace today is finding a viable business model. Or, put another way, to make your product profitable. A priori, these platforms have two ways of monetizing: charging the user to contract from them or charging the financial institution for marketing their products. Two models do not usually fit with the current user’s or bank’s profiles.
Finally, integrating the necessary technology to develop the financial marketplace represents a growing problem for entities, mainly since different providers are typically used for each area.
In short, there is no doubt that the financial marketplace seems to be the natural evolution of the physical branch, developing products, services and functionalities that are increasingly adapted to the user and with a model that is increasingly committed to exploiting data.
Similarly, it seems clear that this comprehensive digital transformation process could still take years for financial institutions.
In addition, the lack of a regulatory framework, the gaps in usability that are gradually being covered, and the absence of a transparent business model in terms of profitability mean that, today, there are hardly any platforms of this type or that there are in very early stages of development.
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