Digital banking and FinTech operate nearly on the same operational model, and they are out to create similar values – speed and convenience. To start with, according to Wikipedia, digital banking is part of the broader context for the move to online banking, where banking services are delivered over the internet. The shift from traditional to digital banking has been gradual and remains ongoing, and is constituted by differing degrees of banking service digitization.
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On the other hand, FinTech is the technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. It is a portmanteau of “finance” and “technology. To put it simply, it is the ability to carry out financial transactions through the instrumentality of technology.
The use of smartphones for mobile banking, investing, borrowing services, and cryptocurrency are examples of technologies aiming to make financial services more accessible to the general public. And in some way, the services of both digital banking and FinTech go
pari passu. In this article, I shall highlight the top four gaps in the FinTech and digital banking industry. It is expedient that both industries know the challenges faced by the users of both industries to create more value.
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Insecurity
Both the digital and FinTech industry are plagued with insecurity. Despite seemingly impenetrable gateways operated by several banks and FinTech companies, the ssue of cyber attack is prevalent. This is especially true for online banks and cryptocurrency companies. For example,
The Economist claimed that cryptocurrency has been used for money laundry and terrorism sponsorships. According to a study done by Specialist Banking, mobile browsers and apps account for 71% of fraudulent bank transactions. This statistics is a big impediment to the growth and development of online banking and FinTech companies.
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Technical Issues
Several technical issues plague the digital and FinTech sectors. For example, the issue of internet failure remains of those gaps that these FinTech companies and digital banks must solve. There have been cases of internet downtime which affect the ease of transaction. Furthermore, during internet downtime, you might find it difficult to access your funds or carry out financial transactions. Bank and FinTech servers are prone to both intentional and accidental downtime. Therefore, FinTechs and digital banks must endeavour to explain to their customers that internet downtime or technical issues do not affect their funds.
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Changing Banking Habits
Digital banking usage has seen a sporadic rise during and after the pandemic lockdown. Due to the lockdown restrictions, digital banking has soared and now up to 80% of Nigerians prefer online banking to brick-and-mortar. Mastercard reported an increase of 40% globally in contactless transactions in 2020. Despite, the increase in digital baking adoption, many customers have always insisted on virtual banking. On the other hand, FinTechs must be able to understand what customers want, especially in providing 100% transactions.
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Lack Of Customer Relationship
As a result of the rising adoption of virtual banking, most FinTechs and digital banks are neglecting the concept of customer personalization. The decline in customer care and personal relationship is a huge gap that will be produced as time goes on. As the gap increases, customers might experience difficulty in the transaction if a digital banking operation goes 100%. The benefits of personal relationships cannot be overemphasized. This is where customer complaints, suggestions, and recommendations can be gotten and used by these companies.
Featured Image Source: Global Trade Magazine
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