By Arina Smith
Technology usually does its job quietly when you implement it with your existing systems. Whether it is your offline retail business through a brick and mortar store or an online e-commerce business, whether you sell any product or service, you will be able to reach out to and make the most out of your customers. Technology can help you do that.
Even banks and financial institutions now use technology for their services to reach out to more customers and make their services better. However, the extent of using technology by the banks does not seem to be as it should have been, especially when the FinTech companies are rising in numbers at an incredible pace.
Recently, banks and other traditional financial services have raised their concerns about the disruption of services due to the rise in FinTech or Financial technology services. Ideally, the power of FinTech cannot be overlooked as it compels the traditional financial systems such as banks and orthodox credit unions to innovate.
The nature of banks
If you look deeper into the matter and try to recollect the last instance when you used words such as ‘innovation,’ ‘futuristic,’ and ‘forward thinking’ with banks, you will not be able to. This is because banks are considered to be the most old-fashioned, safe and traditional in their operations.
- When you consider the finance industry you will see that it is in fact moving at a fast and often at a scary speed.
- Add to that, the entry of the new players and especially the FinTech services are now helping it to rocket away to a bright and shiny future.
That means the FinTech services are daring the banks and traditional financial machinery to either keep up with this rocket speed or be left far behind in the race. Therefore, the future of the banks will be bleak if they do not make any changes in their attitude, lending process, and policies.
- Ever since the beginning of banking, banks and financial institutions are said to have taken a conservative approach to manage finances. They have been criticized for following outdated and outmoded processes of functioning. The major reason why banks were such non-glamorous financial entities was that they were always against taking any form of risk.
- The financial technology companies, on the other hand, are anything but traditional and conservative like the banks. They are hot and happening spouting with the coolest technology to support them and grabbing all the opportunities with both hands to make a more secure future.
As a result of the recent financial crisis and collapse, there was a significant disruption created in the financial industry which resulted in the emergence of the financial technology firms or the FinTech firms as they are referred to more commonly giving credit to their snazzy portmanteau.
Change in notion
This means that if banks want to stay relevant and active in this modern day and age they need to innovate, which is the demand of the hour. To many critics and financial experts it seems that:
- All banks should start working with FinTech institutions if they desire to move ahead of the curve and walk into the 21st
- They need to drive change and innovate immediately before it is too late.
However, the players themselves have a difference in opinion about the ability of the two different systems having a common ground to work together. They possess this common and wrong notion that since these two systems are much different in nature and operation it is not possible for both of them to work in tandem.
Off the bat, there are a few specific things that you should know and understand very clearly just as you need when you look up at Nationaldebtrelief.com for debt relief.
- This notion may seem to be correct and valid but in reality it is not so. With the collaboration of these two extreme opposites experts suggest that it will benefit the customers above everything else.
- FinTech companies are highly dependent on banking institutions because every big or small financial asset like credit cards, insurances, and loans originate in banks.
Moreover, the years of existence of the traditional banks are much more as compared to the FinTech companies and therefore have a lot more knowledge about the market and even about the customers. It is wrong to project or entertain such an identity of FinTech firms, especially when these firms guide some of their top clientele to banks to seek expert financial suggestions.
It is wrong to see banks and FinTech companies standing at opposite ends of a divide. This is a faulty assessment to make. A good understanding would be to view both of them as complementary entities serving the same goals and aims. According to me, FinTech companies help both banks and customers by providing expert solutions and suggestions to both.
It is simply that they are more technology driven middlemen and therefore have a greater potential to perform their job of acting as an intermediary on a much larger scale as compared to the traditional banks.
Need to collaborate
Now consider the reasons as to why banks should try and work together with more and more FinTech companies-
- Firstly, this will satisfy their needs for customers. Since inception banks have been functioning in the same old fashion with tellers locked in sturdy cages and the workers working for short working hours. However, even the arrival of net banking does not seems to have changed the scenario. This is because the banking software is technologically dated. This does not offer the customers a pleasant experience. With the advent of the fintech firms as their brand for tailored customer experiences are now provided to the consumers. FinTech companies will help banks speed up their process and connect better their customers to provide a higher class of service.
- Secondly, the spread and expansion will increase as operational overheads and functions like marketing and digital services. This is where FinTech firms can bring in their expertise.
- Thirdly, technology will help them innovate, update and improve their current systems to stay ahead.
These are great omens. These are positive developments. We can only hope that the exchange of ideas between banks and FinTech firms leads to the creation of a better financial and economic ecosystem.
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