In recent years we have seen changes in the banking industry
banking has become diversified; dependent on technology; innovative; affected by changing regulations and more competitive with non-traditional providers entering the finance arena. And the innovations keep coming! It is now clear that banks that don’t use the latest technology will have a hard time competing with those that embrace digitalization. Challenger banks and FinTech companies are impacting the finance industry dramatically as they are constantly incorporating advanced technology, not only to keep up with the latest banking technology but also to keep up with the changing needs of customers living in a digitalized world.
Digitization of banking means easier, more convenient, faster and cheaper international banking services. In today’s finance industry even unbanked customers; underbanked customers and customers rejected by traditional banks can avail themselves of excellent financial services provided by FinTech businesses, challenger banks and EMIs as well as forward-thinking traditional banks that have managed to adapt with developing banking technology.
The Effect of FinTech on Payments
In the past payments were made by visiting a high street bank branch or finding a card reader of some kind to make the payment. Making an international payment was even more complex, costly and slow. Since the advent of FinTech there are multiple payment options available that are faster, more convenient and cheaper than in the past. As payments are a major part of banking FinTech’s impact has been significant to the entire financial industry.
PayPal was one of the first companies to offer convenient, straightforward payments as early as 2002. Thanks to the innovations of FinTech and eCommerce making online purchases at the click of a button is an everyday event in most people’s lives. FinTech makes online transactions seamless with technology that automatically calculates and converts currencies when the purchase is international; calculates and deducts/adds fees and approves the transaction.
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.
The Effect of FinTech on Forex
With the help of FinTech, Forex companies and money transfer businesses were able to save transaction fees and appeal to customer needs that were not being met by traditional banks. The value of Forex companies and money transfer companies rocketed thanks to FinTech solutions they could offer customers.
The Effect of FinTech on Mobile Payments
Mobile payments were one of the biggest changes FinTech gave to the banking industry. With mobile payments customers can make low-cost payments; peer-to-peer transfers; manage their finances and make fast, easily executed money transfers. Mobile payments have led the way for unimaginable growth in ecommerce with many companies like AliPay handling billions of low-value transactions that add up to billions of dollars profit each year. People are becoming increasingly dependent on their mobile device for use in all areas of their lives and so the mobile payments sector will see even more growth in the future thanks to FinTech.
The Effect of FinTech on EMI Payments
Until recently EMIs have dealt mainly with Forex payments and money transfers but now they are making in-ways into the B2B market. Traditional banking has kept a strong hold on the B2B market with not many opportunities for new comers. Now with the existence of a corresponding banking network non-traditional players in the finance industry can offer secure, rapid, low-cost international payments.
The Effect of FinTech on Accounts
In the past bank accounts were very much standardized with most banks offering the same accounts, amenities and services to their customers. However, since the financial crisis in 2008 EMIs; challenger banks and other financial service providers offer customers an alternative to the standard one-size-fits-all bank account. These innovative finance companies have realized that different customers have different banking needs. Customers are attracted to alternative accounts that include online banking services; 24/7 customer service; lower rates and various card options. With the help of FinTech, challenger banks are finding mobile-only banking a viable alternative to physical bank branches and traditional bank accounts. By using FinTech, EMIs, challenger banks and non-traditional financial service providers now offer customers better accounts with better services and value.
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.
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