How FinTech is Changing the Financial Industry

How Fintech is taking over the world

The finance industry has traditionally been about visiting a bank to make withdrawals and deposits, to speak to someone about investing, and the best ways to handle their money. That is no longer the case. With the introduction of financial technology, traditional banks, credit unions, and large financial institutions have had to pivot to keep up.

Fintech startups have revolutionized the industry making banking easier for everyone and showing traditional banking where the future is going. It’s spreading like wildfire worldwide and affecting all areas of the financial sector, from customer service to payments and loans. Fintech companies have created a significant disruption to traditional banking in recent years.

Why are people so eager to integrate FinTech into their daily lives? The Bank of International Settlements reports that as of late 2019, there were approximately 5 billion mobile phone subscriptions worldwide. People are now used to taking their lives with them wherever they go. As a result, they want their banking to be as easily accessible as their access to email, social media, productivity, etc.

The Central Bank of Ireland reports that 78% of users manage their money and make payments via mobile devices. People don’t want to go through the inconvenience of going to the bank anymore. They want their bank to come to them. Whether they need to pay a bill, send money, or check their account balance, people have become accustomed to having their lives at their fingertips.

Here are four significant ways that Fintech is changing the financial industry.

FinTech allows companies to be more customer-centric. The traditional banking sector has always been in it for the money more than the customer. According to Price Waterhouse Coopers, only 53% of conventional banks believed they were customer-centric in 2019. They have traditionally lagged behind FinTech companies in offering customer service via social media and other non-traditional channels such as chatbots.

FinTechs can fill in the gaps left behind by traditional financial institutions. Focusing on customer needs allows financial technology companies to narrow their focus to meet specific customer needs. They can get laser focused, such as helping those with poor credit scores obtain loans or offering more user-friendly tools to help people manage their finances.

Financial technology helps businesses as well as the end user. Not keeping up with the latest technology is part of what slows the process of businesses. Financial institutions are increasingly searching out software solutions offered by FinTech companies, such as SaaS, to streamline their customer needs and move more towards mobile abilities. They are looking to add value to their customers via third-party apps.

Considering that banks and FinTech companies are both in the finance industry, it’s interesting to see how they view each other. Traditional banks are concerned about the security of FinTechs as well as their ability to be held to the same regulatory standards. FinTech views banks as having a very different management style and operational procedures.

However, these impediments should not inhibit banks and FinTech companies from working together. Financial regulatory standards need to be updated to keep up with and embrace technology (which is here to stay). FinTech companies can work with banks to update their operational procedures and open the eyes of management as to how they can successfully collaborate.