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Jason Simon explains the value FinTech brings to telecommunications

By: WebWire

The technological revolution has made the telecommunications industry one of the leaders in digital transformation due to the impact it is having on all other industries. However, the increase in competition and technological progress itself has placed them at a major crossroads. The telecommunications sector and the so-called Financial Technology Institutions (FinTech) have shown their resilience by resisting the adverse conditions of the pandemic and emerging stronger. Jason Simon, a FinTech specialist, explains how telecoms have managed to increase their value thanks to the arrival of FinTech.

Over the last few years, communications have ensured the continuity of productive, educational, recreational and cultural activities in several countries. Financial firms maintained their pace of expansion by bringing products and services closer to users.

“The merger between Telecom and FinTech may represent a win-win scenario for both industries. The strategic synergy benefits both parties because they can differentiate themselves in the context of the telecom and FinTech industries, respectively; the latter has consolidated itself as highly competitive,” explains Simon.

Simon believes that telecommunications and FinTech companies have many things in common because, on the one hand, they are intermediaries in their segments (finance and communication). On the other, FinTech and Telecom can leverage the power of their large customer base to earn higher revenues and expand their business operations.

The merger of these two industries has a reason. According to figures from Global Market Insights, the global wallet market will exceed $350 billion by 2026, which Telecom could leverage.

On the other hand, according to figures from Finnovista and the Inter-American Development Bank (IDB), there are more than 112.000 FinTechs in the world and they are also growing in value. More than a third of them are considered “unicorns.” In simple terms, this means that their market value is greater than one billion dollars. Together, they are now worth more than $147 billion.

There are more reasons why telecoms are FinTech's best ally. For example, the merger of these industries doubly boosts financial inclusion. Telecom companies can offer financial services to the unbanked population, so people with mid-range cell phones can have the opportunity to have a digital financial solution.

“Both industries can have access to new technologies to provide a better user experience for their customers,” asserts Simon. “The impact of big data sharing between the two markets has certain effects: existing telecom customers provide valuable information such as spending habits, which are very useful when offering financial products. Also FinTechs can track customer-oriented metrics to improve their services.”

The merger of Telecoms with FinTechs is beneficial because it brings value to customers. Telecom companies can reduce the financial burden on customers by providing them with free checking accounts, better interest rates and payment for services, among others, benefits that are already provided by FinTechs.

The alliance between these industries also increases the size of their offerings. This is exemplified by Samsung, which has Samsung Pay, an electronic wallet, or Orange, through Orange Money, which provides payment services to its customers in France. In Germany, T-Mobile offers payment facilities to its customers who already have a telecom service.

In this sense, telecoms can be the best allies of FinTechs, because their integration helps to offer a unique, differentiated proposition in the digital financial market. On the other hand, it provides new service opportunities for its users. The FinTech and Telecom sectors have been among the main winners during the pandemic due to the substantial increase in a home office and digital collaborative work, which has required remote communication.

In the last year, FinTechs have become one of the preferred options for entrepreneurs to apply for loans due to their lower and more competitive interest rates, in addition to offering additional benefits. On the other hand, the need to avoid branches and face-to-face procedures, as well as the increase in eCommerce, have boosted the use of digital means of payment, as well as the services offered by FinTechs.

About Jason Simon

Jason Simon is a FinTech and digital payments expert who became involved in cryptocurrencies when they were first introduced. He enthusiastically follows what is happening in the evolving world of finance, excited about the prospects digital currencies offer global consumerism. When he's not involved in helping advance the digital payments space, he enjoys spending time with his family and improving his community.

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