As with all areas of our daily life technology now plays a vital role in how we manage our finances. Today it is impossible to do business without using technology in some form or other. The need for forward-thinking financial institutions to provide innovative state-of-the-art financial services gave birth to the FinTech sector (Financial Technology). FinTech companies specialize in solutions that enhance financial processes and banking.
FinTech Brings Innovation to Traditional Banking
FinTech companies aim to produce convenient financial services and integrate specific technically advanced services into the existing banking infrastructure. With FinTech companies customers have a new platform where they can open bank accounts easily; conveniently control and monitor their accounts and even switch between providers at the touch of a screen. This appears to be what customers are looking for – the ease of instant, one-click results with their banking, as with so many other areas of life that are now controlled digitally.
The Use of Open Innovation in Banking
Open innovation is a term used to describe the use of innovative technology beyond the bounds of a company to accelerate the company into the future, improve the operation of the company and increase profits. Using open innovation (outside the company) and internal innovation (knowledge and resources within the company) a business can expand and become part of the digital age. By being willing to go beyond the company to source technical innovations financial organizations are able to develop new ideas; improve organizational strategies; identify potential areas of growth and develop new skills. Businesses find that by sharing knowledge and opening up their intellectual property to external technological resources and investing in new technology they can increase their profits and expand their operation.
With open innovation the ideas and innovations of finance professionals across the globe have produced ground-breaking banking technology. FinTech is increasingly accepted by regulators and conventional banks are having to adapt in order to remain relevant. FinTech brings added competition to the banking industry and although this is challenging for traditional banks it is good for customers bringing them lower banking fees; convenient services; efficiency and a broader range of banking services.
The Banking Sector is Changing with the Changing Needs of Customers
In today’s world customers have high expectations of their banks and this has created a gap in the market which has been filled by FinTech businesses and technology companies. Traditional banks no longer have a monopoly on finance and customers can easily be drawn towards non-bank financial institutions offering more technically advanced and diverse banking products. FinTech companies have reduced the role traditional banks play in the finance arena to a point where customers no longer need a middleman and can handle their banking directly.
How the Financial Industry has been Transformed by Digitalization
The changes to the financial industry are on-going and we won’t see an immediate digital transformation in all financial institutions. It will take time for each financial organization to implement digital changes to their systems but in the end this will result in a better customer experience. One of the ways banks and other financial organizations are making the change to digitalized banking is by creating a digital banking subsidiary which uses alternative technology. In this way the transformation can be gradual and smooth without being held back by traditional systems of the main organization.
The future of banking seems clear – a technically-current digital platform offering instant digital banking solutions. In order to offer customers this kind of instant banking service including back office processes a complete shift in the way we look at banking needs to occur and redesigning of procedures to minimize the number of steps in the banking process.
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