Fintech has significantly impacted the banking industry.
These innovations have greatly improved the banking sector and has the potential to do a lot more.
As technology develops, we have seen a lot of new innovations that have challenged the status quo and revolutionized how our society functions. From the steam engine to smartphones, our society has become more efficient and effective. A new and emerging innovation that is currently accomplishing this is fintech and its disruption in the banking sector. Fintech has taken the banking industry by storm. With the increased usage of mobile devices and smart phone technology, fintech is able to offer new services that revolutionize the banking industry and challenge the status quo.
Financial technology or fintech is the term used to define any emerging innovation, whether it may be software, processes, or applications, that can create new and improved financial services for consumers and businesses. This can include services such as personal financial management, payment, insurance, asset management, and more. Since the market crash in 2008, fintech has reformed the financial services industry and vastly improved how we make payments, investments, and manage our assets. According to a recent Deloitte industry report, “customers now expect seamless digital onboarding, rapid loan approvals, and free person-to-person payments – all innovations that FinTechs made popular,” suggesting how successful FinTech’s has been in impacting the banking sector.
Though they were at first hesitant about this new innovation, the banking industry has embraced FinTech and is now working alongside it in order to improve their services. According to a KPMG and CB insights report, global investments for fintech reached to $13.8 billion in 2015, showing their great interest in the technology. Some developments that the industry has seen are more time and cost efficiencies, better customer experiences, compliance improvements, and risk reduction. Here are some of the effects of fintech on the banking sector.
Improved Customer Experience
Like many other industries, providing a strong customer experience is a primary goal for the banking industry. By providing a service that is 24/7, fintech has and can vastly improve this aspect for the financial service industry through mediums such as social media and smartphone apps. For example, with banking mobile apps such as Wells Fargo or Chase, you can now access your account summary, transfer funds across accounts, and make payments, making it very convenient for the customer thus creating a very seamless and omnichannel experience. This can translate to more brand loyalty, which can be scarce in today’s industry.
Account management isn’t the only benefit that customers can reap from fintech; robo advisors have greatly improved customer experience as well. Robo advising is essential an algorithm that relies on a series of questions to that can help customers create an investment plan. This has proven to be an effective tactic because the majority of the time, customers are looking for low-cost investments. This tactic will likely grow to become more useful as the new generation of workers are becoming more technologically competent.
One of the main developments of fintech is how efficient it has made the banking and financial services industry. Whether it may be payment services, insurance, or asset management, fintech has the potential to lower the cost and improve accessibility. One of the primary ways that it can accomplish this is by improving information alignment across many channels which is known to be one of the biggest obstacles for the banking industry. With today’s technology and data available, it has become easier to create a more seamless process with less errors.
By 2020, the fintech industry is expected to grow by 55% as more technologies are coming prominent in our society. The future looks bright for the financial services industry as it becomes more efficient and seamless with fintech.