Fintech and Banking - Transformation, New Opportunities and New User Experience


Author: Ivan Bošković, Director of the Directorate for Payment System and Financial Technologies

Analyses and reports from institutions such as the Financial Stability Board, the International Monetary Fund (IMF), and the European Central Bank (ECB) bring similar conclusions. They conclude that the economy is becoming more digital, data usage is increasing, and investing in technology results in the faster development of new opportunities. Technological innovations bring solutions seeking to increase efficiency, security, provide easier access to the financial services market (including payments execution and receiving, borrowing, managing income risk, savings and transactions, and consulting) while reducing costs and waiting times for clients.

The application of technology in all these financial sectors, resulting in the traditional processes’ transformation, and bringing new opportunities and new user experience, is called FinTech.

If you have used at least any banking or financial service through a software application on your mobile phone or computer, you already belong to this unstoppable trend. The Covid-19 pandemic further demonstrated that technologies can be a support and a helpful tool in an emergency. Encouraged by specific constraints during the pandemic, users who have replaced the human bank teller with any digital service are unwilling to return to the old school. On the contrary, service providers are now expected to have more digital services, more straightforward management options and, above all, more secure software applications. It is no longer acceptable for many modern business relationships to wait several hours or several days to execute a specific banking process.

While entrepreneurs and investors within the fintech have recognised the space for new services and new ways to provide traditional services, trends in sophisticated technologies’ application face regulators with many challenges, such as: how institutions can support future consumers’ needs and keep up with new technological trends, new business models, new risks and threats, infrastructure transformation and digitalisation? Regulators must carefully balance efficiency and stability against rapid change and ensure that stability and integrity risk management, including money laundering and terrorist financing, is more efficient without stifling growth, competitiveness and innovation.

In addition to stimulating innovation, all financial institutions have an important task - maintaining a high level of confidence in financial services, especially in the change and development phases. Maintaining trust in financial services requires quality financial education and sometimes wholly new legal solutions defining the rights and obligations of all parties involved and providing better user protection. Apart from innovators and technological trends, the negotiation process for EU membership requires the latest fintech regulation. The CBCG actively participates in this process and cooperates with EU institutions intensely through continuous communication in the regulatory framework harmonisation and the implementation of projects.

Recognising its role in stimulating the use of information and communication technologies in the banking sector, the CBCG has provided internal organisational changes with resources to help improve service providers’ business models and understand customer needs. Since the establishment of the Directorate for Payment System and Financial Technologies, many activities in that direction have been conducted independently in cooperation with other institutions and the private sector. Among them, the initiatives of establishing the Fintech Hub and organising the first Montenegrin Fintech Conference and Hackathon received a particularly positive reaction from the public.

What infrastructure is required to enable more advanced functionalities? What are the possibilities and the potential benefits? How to regulate it? What are the critical success factors? What are users’ costs? These are some topics discussed in the active dialogue the CBCG initiated with the private sector and partner organisations. Recent research has enabled a comprehensive mapping of the representation and scope of digital fintech services in Montenegro and possible improvement segments.

All the aforementioned will be visible and measurable through a series of activities and projects, including the already developing National Fintech Strategy. The Strategy will help all financial services ecosystem stakeholders coordinate action so that this area’s digitalisation achieves the desired results.

The key focus of the CBCG in the future will be creating the conditions for the rapid transformation of banking sector operations enabling digital alternatives to keep pace with consumer demands and respond to new challenges.