As technology continues to transform the way we live and work, it has now become a key part of our daily lives from how we shop, communicate, and even travel. In the world of personal finance, consumers demand the same, easy digital access to their bank accounts from their mobile devices. When it comes to FinTech and banks, digital banking is transforming traditional financial services by making them simpler, cheaper, and more accessible. According to a study by PwC, in the next three to five years, 82% of financial services providers are expected to adopt Fintech solutions even further. But what exactly is fintech and how is it disrupting and improving nearly every area of finance and the banking industry? Here’s a quick look.
What is Fintech?
Fintech (abbreviated from Financial Technology) has been around for decades, but it gained popularity and recognition through the release of smartphone apps. Before the advent of mobile apps, banks required customers to physically visit their branches for some of their services. But a new wave of fintech startups came out to meet this need and offer consumers financial services over the internet. Fintech firms create financial applications that make the process of banking much more convenient. Instead of having to visit a bank branch to get your paycheck, a tax refund, or check your account balance, customers can perform all these transactions and more from their phones and their computers. Today, the Fintech sector is rapidly expanding, and its reach is greater than ever. Fintechs may conjure images of startups and industry-changing technologies, but traditional companies and banks are partnering with fintechs and utilizing their services for their own purposes.
How is Fintech changing banking?
In addition to technology, digital lenders are providing customers with “digital lending” services. These include loans to consumers and businesses, as well as leasing and real estate services. Since 2014, there has been a 900% increase in funding, with Fintechs raising more than $112 billion in investment funding, which is helping financial services providers compete more efficiently and increase their revenue. It is clear that customers prefer quick, convenient options, and banking is no exception.
What is the impact of Fintech on banks?
The omnichannel customer experience: Customers are increasingly communicating with businesses through digital channels. These interactions have changed rapidly, and banks need to adapt their procedures to digitize them as much as possible to make signing contracts and customer service easier. This area is a perfect example of how banks are responding to fintech innovations: exchanges between consumers and banks are carried out via all types of devices, such as smartphones, computers, or tablets, using social media, email, chat, SMS, and other methods. Customers can have consistent and transparent online interactions regardless of the device they use, thanks to different “smart” branches that easily integrate with various digital services. As a result, Fintech startups can provide software that allows banks to adopt multichannel messaging which can be combined with artificial intelligence and machine learning. The goal is to make both operations and communication easier.
Chatbots: Chatbots are without a doubt widely accepted by various banks due to their functionality which serve as a platform for conversational banking or fluid communication processes. Since the implementation of chatbots, agents have been able to efficiently handle customer concerns over the phone. Modern Chatbot technology provides a prompt response that directs the customer to the appropriate services, ensuring customer satisfaction. Chatbots are a useful Fintech for banking solutions that assist 24 hours a day, 7 days a week. Customers are guaranteed feedback regarding their financial services needs or concerns with a hybrid system, even if there is no human contact.
Data Usage: Fintech helps banks make better use of data. Many banks have adopted fintech solutions and taken control of their operations which has increased the speed banks provide services, as well as offer improved flexibility and client commitment. Fintech solutions never disappoint when it comes to data. It becomes easier for them to organize and have a deeper understanding of who their customers are and what they need when they use fintech solutions. Fintech banking services and solutions, such as artificial intelligence, chatbots, and machine-based learning, help customers manage their needs more efficiently. Bank employees are also in a better position to focus on other activities and solve more complex problems because of this. Fintech is a type of digital transformation that enables financial institutions to meet the complex demands of today’s banking world.
Timesaving: In any type of business, time is crucial. For a bank, it is even more critical. Fintech banking services solutions enable banks to provide timely services to customers who have adopted the technology. A bank or financial lender can easily calculate a customer’s credit score, the interest rate on an applied loan, and set a repayment date using machine learning technologies, among other things. This can be accomplished without the assistance of a bank manager. Fintech peer-to-peer, AI, machine learning, and other technologies reduce time spent on financial operations. Finally, customers can quickly access the services they require in no time.
Fintech vs banks: how are traditional companies adopting Fintech?
Fintech allows companies to stay abreast of current trends in the marketplace. If a financial institution wants to take advantage of new technology, partnering with Fintech companies can facilitate that process. Traditional banks are moving beyond their common comfort zone to modern solutions that ensure bright growth, which is changing the industry’s shape. With continued advancements in technology, customers will be able to access better services, more easily, and at a much more affordable cost.
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