Innovative or Disruptive? How Financial Institutions are Leveraging Fintech in 2021
The financial technology sector has undoubtedly undergone massive growth in the past year. A World Bank report indicated that apart from lending, Fintech has ballooned across the board, with the most significant developments taking place during the pandemic.
The report noted that Fintech is gaining traction primarily due to its affordability, serving as an economic growth and poverty reduction tool. However, this comes when face-to-face activities are considered risky, prompting consumers to shift to online banking alternatives.
Apart from the soaring user numbers, Fintech companies have also focused more on expansions in the array of services offered. This has meant that banks are to either adapt or face the heat to overcome the disruption by their Fintech counterparts. But even with the mounting pressure from financial innovators, a few banks have managed to stay at the top of the food chain, according to data released by the Federal Reserve Bank.
Banks are fast embedding the latest Fintech trends into their traditional products to ensure convenient and quicker access by users. Customers, on their part, are shifting to phone-based banking apps to access services such as cash checks, learn money lessons, invest, and much more. A study by Statistica established that 90+% Americans have access to the internet, further making up the case for increased Fintech’s uptake during home working and lockdowns.
How Fintech is Aiding Players
Enter the new age of financial technology and the trusts and conveniences they present to consumers. Whether you’re shopping online, comparing exchange rates, sending or receiving money, everything takes place in real-time. And when it comes to digital and brick-and-mortar, it’s a game of upgrading or risk being phased out.
This year and beyond, we’re set to witness traditional and non-traditional banking structures merging to digitally offer customers a blend of conventional and modern-age financial services. Already firms such as MasterCard are making strategic partnerships to enhance Visa Card’s functionalities in the digital era. Google is also making steady strides with its payments’ product, G Pay.
The faster adoption of AI solutions by Fintech and banks is a sure sign that the pandemic is spurring the digital banking sector to greater heights. Customers use these solutions to conveniently perform various tasks, including analyzing financial products, fraud detection, and accessing virtual technical support.
Fintech is also helping banks achieve notable gains in terms of security. This reminds us of an ancient French proverb that goes: Ils doivent envisager qu’une grande responsabilité est la suite inséparable d’un grand pouvoir, translating as: “with great power comes greater responsibility.”
As the world goes digital in various aspects, including learning, interacting, banking, etc., future-looking financial players are bracing themselves for any potential security risks.
As a result, when you interact with a digital bank today, thanks to Fintech, you’ll probably be met with facial recognition functionalities or two-factor authentication as a way of curtailing identify fraud in the financial services space. Of course, more needs to be done if banks are to survive web 3.0.
Read next: What is Fintech and Why Should You Care?