FinTech and The Future of Banking
From “simple” payment platforms like Venmo to the more complex decentralized finance networks across the Etherium blockchain,FinTech has generated much hype in recent years, bringing new competition to traditional financial institutions. Banks are adapting, keeping up with long-term trends as users start switching to FinTech apps built in garages and Silicon Valley coworking spaces.
Things are changing dramatically, with private venture capital skyrocketing and the share of investment dollars heading towards FinTech. It’s now included in the innovation economy, growing in popularity with the likes of chatbots, artificial intelligence, cryptocurrency and blockchain assets.
Let’s delve more into what the future has in store for FinTech.
What is FinTech?
FinTech stands for Financial Technology, a fast-growing area in today’s global businesses. The definition sounds simple, though the products and enterprises employing the newly-developed technologies in the financial industries are more complex.
In just a short amount of time,a new generation of FinTech has developed, which has already impacted the way we conduct business and transact as customers. For example, everytime you split a meal with your friends and transfer $20 on Venmo to cover your portion of the meal, you’re already participating in a revolutionary new experience.
The future of finance has even more potential, and many institutions now offer FinTech courses for professionals and executives that provide further knowledge on technology, innovation and how both continue to transform the banking industry.
The Future of Banking
So, how will FinTech change the future of banking?
According to Citibank, Fintech may reduce jobs in the banking industry by 30% or more because users are now switching to FinTech services over traditional banks. However, as a whole, banks will remain a trusted institution, and the growth of FinTech may actually create new jobs too.
Numerous banks have already responded to the growth of FinTech by developing services of their own, such as online loan calculators, banking apps, and more. Some banks are also investing and collaborating with FinTech businesses!
Right now, financial analysts don’t predict the downfall of traditional banking. However, they are aware of the synergy between the old and the new.
Before, banks were untouchable institutions without any competition or much variety in services. Today, the banking industry will need to compete with a whole ecosystem, with the need of becoming innovators to avoid falling far behind.
There is a benefit to all of this of course, and it comes down to the customer. Customers will now have even more options and with that comes freedom and flexibility, as they navigate to the most convenient financial services and seamless experiences.
There are even more factors to consider when it comes to the future of FinTech:
- Entry barriers have lowered as technology continues to flourish, forcing banks to adapt or lag behind.
- There is greater access to information and that data can be used by companies to identify trends and preferences, adjusting their business strategies in real time.
- FinTech changes the way we think of money. For a short time, SweetGreen stopped accepting physical money and received a considerable amount of backlash for it but now there is an increasing number of cashless businesses. People are starting to prefer digital wallets and moneyless transactions.
Wrapping It Up
Fintech continues to advance, and it will continue to affect the banking sector in the future. However, financial institutions are not giving up so easily. They have proven they are here to stay as long as they have the right strategies and adjust accordingly to the technological advancements and growing consumer needs.