Guestpost by Ashley Lipman
Advances in technology have revolutionized how the world does business. Every industry has been impacted, from imports and exports to education, to finance.
The financial service industry, in particular, has seen numerous advances and shifts in how people bank. This leaves a lot of people wondering if Fintech— financial technology— is really reshaping the financial service industry, or if that’s just a myth.
Here are some of the changes and what you need to know about their impacts.
What is Fintech?
“Fintech” refers to the paradigm shift toward technological integrations in financial services. This covers everything from automation to bitcoin and cryptocurrency to using a smartphone app for banking. It’s the innovations that are happening every day in the world of finance that is causing a shift from business-centric practices to a customer-oriented way of doing things.
Chances are, the way you handle your finances today is significantly different than how you did a decade ago. If you are used to tap on your credit card or check your account balance on your phone, you can thank Fintech.
Reducing the Need for Traditional Banks
As the world moves more online, there’s been a reduced need for traditional banking. More brick and mortar banks are facing pressure to improve their online offerings to compete against virtual banks.
Virtual banks, like Tangerine, have a competitive edge as they have minimal overhead costs in comparison to traditional banks. Furthermore, these online services reduce the need to visit a bank teller, which creates a ripple effect on employment within the financial industry. If a consumer can invest with using an app or transfer money from their phone, why would they visit a financial employee to get it done?
Using Biometrics for Security
Security in the financial industry is changing, as well. While many places in the USA are still using signatures with credit cards, countries like Canada have shifted to pin-access chips. And that’s the least of the security advancements.
More people are moving to services like ApplePay. As a result, biometrics are expected to be the next big thing for financial security. Rather than remembering passwords, financial services will need to compete with the security features that many app providers deem necessary. This goes hand-in-hand with consumers becoming more aware of privacy and protection.
Creating Accessible Credit Management
Fintech has created the opportunity for the average consumer to become more in tune with how their finances work. Online resources and podcasts are teaching the average consumer how to take control of their credit and become financially independent.
This movement has resulted in an increased demand for credit dispute services to manage negative item disputes and inquiry removal requests to improve credit scores. As people become more aware of their options with these services, the credit industry will be forced to adapt.
Prioritizing Customer Service
People are no longer accepting of the fact that the bank calls the shots. Rather than working with one financial service provider, consumers are shopping around to find the provider that serves them best. As there are so many options available now, financial services will need to prioritize customer service to compete.
These changes include increased accessibility through chatbots and app development, as well as creating an omnichannel strategy and flexibility for users.
Social Lending and Investing
It’s now easier than ever to source money from others in a secure manner. This has created a movement toward social investing and crowdsourcing, rather than defaulting to a financial loan service. As financial loan services make their money on interest, fewer borrowers mean less profit.
Over the past ten years, peer-to-peer lending has transformed from a startup idea to a multi-billion dollar industry that’s based on cutting out the middle man— banks and loan providers.
On the other side of the equation, the AppleCard is expected to revolutionize the credit card industry and cause a significant disruption in this area. Whereas credit cards were still able to get away with high-interest rates, they’re expected to make some serious adjustments in the coming years to stay afloat.
Is Fintech Reshaping the Financial Services Industry?
Fintech is reshaping the financial services industry at an incredible rate; it’s no myth. With the insurgence of AI and machine learning, these changes are expected to continue. The financial industry in ten years could very well be unrecognizable compared to today.
About the Author
Ashley Lipman is an award-winning writer who discovered her passion for providing knowledge to readers worldwide on topics closest to her heart – all things digital. Since her first high school award in Creative Writing, she continues to deliver awesome content through various niches touching the digital sphere.
I would like to thank Ashley once again for letting us take a glimpse into financial technology or Fintech.
Since there are so many payment options now and a lot of talk on how Fintech revolutionizing the bank industry, I thought it would be great to have an informative article here as well! After all, we are only at the start of a burgeoning industry trend.
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