FINTECH: DISRUPTING BANKING AND REIMAGINING FINANCIAL SERVICES
Aug 18, 2017 | Mike Singh
The digital revolution adopted by different business sectors is transforming the way customers access products and services like never before – including banking and financial services. Thanks to technology-focused startups and new market entrants innovating the products and services currently provided by the traditional financial services industry, the phenomenon called FinTech is born.
FinTech offers exciting tools and services needed to meet the demands of today’s digitally active consumers by using technology and its application in the wider financial services market. The new technology provided by FinTech makes for a genuine alternative to traditional banking and payment systems offered by financial services firms. According to Accenture, global investment in FinTech ventures tripled to $12.21 billion in 2014, clearly signifying that the digital revolution has arrived in the financial services sector.
FinTech is a call from Millennials
The level of FinTech adoption among digitally active consumers is set to grow significantly in the next years and these demands for new, more flexible financial products is being driven by the Millennials. In light of this, several traditional banking organizations have started building more digital acquisition strategies to appeal to the younger consumer as well as improve digital engagement strategies to retain existing higher income and high value customers. Otherwise, these consumers will find their digital solutions elsewhere.
With digitally active Millennials dominating the workforce, they are already driving rapid changes in the financial services industry and the role these services play in how they digitally deliver products. Based on a study conducted by Telstra, young people from ages 18-34 are increasingly switching to a cashless society and use their smartphones to withdraw, transact, manage and invest their finances.
More and more institutions are driven to digitally transform and create networked ecosystems that provide exactly what millennials want and need from online transactions, risk management, investment, and finance services.
Simplicity of FinTech vs Traditional Banking
Traditional banks’ hands-on process and paperworks leave most consumers intimidated. The painstaking procedure of visiting a branch office, opening an account, adding a savings plan, taking out a loan or establishing an investment or insurance relationship versus the simplicity offered by FinTech attracts consumers to switch.
More attractive rates, access to different products and services and a better online experience were popular reasons of using a FinTech provider according to an EY study, but the most prevalent are its impact of making the process simpler for the consumer to engage.
As they pursue a renewed digital customer experience, FinTech is integrating new solutions and simplified operations to improve customer experience, which fosters away from physical channels and towards digital/mobile delivery.
The Future of Finance
FinTech may not completely eliminate traditional, institutional banks in the future but they will continue to disrupt the sector. Digital disruption has the potential to shrink the role and relevance of today’s banks and simultaneously help them create better, faster, cheaper services that make them an even more essential part of everyday life for institutions and individuals.