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FinTech and the Banking Industry
FinTech and the Banking Industry
Over the last few years we have seen massive changes in the banking industry, largely because of developments in FinTech. Challenger banks, start-ups, third-party financial service providers, FinTech companies and other non-banking financial service providers have made the sector extremely competitive. As technology develops rapidly and regulations change to keep up, financial services are progressively becoming digitized, leaving behind banks that are unwilling to evolve. The demise of some financial institutions can also be attributed to legacy infrastructure and incumbents not adapting fast enough. At first new competition did not disrupt the continual stream of revenue to traditional banks. Today it can safely be said that challengers and other new players in the financial sector claim at least a third of the sector’s U.K. revenue.
How has FinTech Changed Bank Accounts?
For decades bank accounts had standard features, with each financial institution offering almost the exact same type of account. With the advent of FinTech new players in the financial sector like EMIs offer accounts that suit the needs of customers. Different customers have different account needs. The challengers listened to customers and their frustrations with conventional accounts and made the necessary changes. Customers were attracted to challengers by favorable fees; streamline online banking; round-the-clock customer service and other financial services.
With digital banking customers now have easy access to their accounts from anywhere in the world and at any time. The unbanked and underbanked benefit by now having access to financial services that they were previously denied. In Europe digital and mobile banks cut down dramatically on the number of physical branches allowing them to focus on other services that were more important to customers.
What do We Gain from FinTech in Banking?
- Since the introduction of FinTech we have a more competitive industry with new, innovative players including third-party providers.
- Faster banking processes
- Increasingly more practical banking solutions
- A more secure banking environment
- Global banking transparency
- Tighter regulation
- Lower fees and charges
- Infinite more financial services are now available thanks to FinTech including mobile banking; mobile wallets; instant payments; peer-to-peer payments and much more.
How has FinTech Changed Payments?
Payments are one of the core banking functions; transferring funds between accounts has been transformed by FinTech from a complex procedure to one that can be set in motion with the touch of a few buttons. Payments was one of the first banking functions disrupted by FinTech. No longer do account holders need to make a trip to the bank or a card reader to transfer money. Sending money, even internationally is now almost instantaneous and no longer has to be so expensive. PayPal paved the way for payment processors offering easy online payments and e-commerce purchases. Now we can purchase goods from anywhere across the globe via the Internet. Thanks to FinTech online purchases and payments can now be calculated, fees deducted and currency exchange accomplished in minutes.
With the help of FinTech money transfer experts created solutions for saving on currency exchange and transaction fees which was previously an untapped niche in the consumer market. Revolut and TransferWise are just two of the companies that have helped revolutionize the way we think of money transfers thanks to FinTech. FinTech has also changed banking forever through mobile payments which are faster and less expensive than transfers ever were. Billions of low-value transactions are processed each month with AliPay being the largest mobile payments platform in the world. All predictions point towards our continued reliance on mobile devices in banking and other areas of our lives.
Electronic Money Institutions (EMIs) have been one of the more significant changes in banking since 2008. EMIs offer a new form of banking although they mainly deal with transfers and PaymentsFX. Increasingly EMIs are managing to offer customers the full set of services and financial products that were previously only available from traditional banks. With EMIs account holders experience fast; low-cost and secure cross-border payments.
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