Overtime, consumers have tolerated the lack of technology experienced in banks, and with the rise of Fintech, banks are now struggling to keep up and offer customers the innovation they desire, because Fintech is bridging the gap between what banks offer and what the modern consumer has grown to expect.
To meet customers’ demand for speed, efficiency, and a better user experience, financial providers now work with Fintech to integrate technology into their services, which enables them offer the flawless experience consumers anticipate.
Therefore, Banks and Fintech have begun to work together in a way that benefits both parties, as banks are looking for new ways to grow their customer base, while Fintechs are looking for new customers.
Banks and Fintech
Fintech is a combination of the words “financial” and “technology”. It’s a term used to describe new technology that aims to automate and improve the use and delivery of financial services and products. Banks on the other hand are institutions, which provide banking services to customers.
Fintechs are not banks, as they do not have the licenses to open current accounts, so they cannot act as a banks, however, Fintechs can act as financial companies in some cases and provide some banking services on a more limited scale, while developing their own products and expanding their market share. Fintechs cooperate with banks in order to offer the customers everything they might need in terms of financial products and services.
It is important to note that the evolution of technology in banking and financial services also highlights one of the reasons why Fintechs and banks should work together.
Some of the technological changes that have affected people’s banking behaviors include:
•Increased use of mobile devices: More people now own mobile devices, and they are using them more often. Banks that want to connect with their customers should be considering ways to make their products and services mobile-friendly.
•Increased availability of online services: While many people still visit a physical bank branch when they need to use their financial institution’s services, many have also embraced online banking, using it to transfer money between accounts, deposit checks, and track their transactions.
•Heightened awareness of security: In response to data breaches, financial institutions have placed an emphasis on improving security and protecting private data. Since a bank might not have the resources or knowledge to focus on data protection on its own, working with Fintech companies, who have an understanding of vulnerabilities and ways to protect against them, is proving to be essential.
However, the following are the benefits associated with banks and Fintech Firms
Access to new markets:
Fintechs are giving banks the opportunities of new technologies, which allow them to have access to different countries that they did not have before. This opens up so many more options for them when it comes to financial transactions and security of these transactions.
Access to high-end tech:
These technologies make financial transactions more secure, and banks do not have to spend as much money maintaining these high-end tools. The technology itself is cost efficient, because it keeps track of all transactions for banks at an affordable price.
Competition with other financial institutions is easier when Fintechs are on the team:
Having this technology team up with banks will help keep them competitive with other financial institutions, because they can fall back on the Fintech technology if their systems go down. This technology allows banks to be more flexible and secured, which in turn makes it easier for them to stay competitive in the market.
Banks and Fintech need to learn to work together as Fintech is the future of finance, and both aim at providing consumers with seamless financial services. Banks have access to new markets, access to high-end tech and this technology is affordable for banks, and competition with other institutions is easier when Fintechs are on the team.
The partnership between banks and Fintech will help harness recent changes in behavior and use of technology, and capitalize on the higher levels of trust people have in tech to provide services that effectively engage with consumers.Featured image: Techvalley
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