Fintech companies are quickly reshaping the banking industry. A new era is underway from AI to blockchain technology, with start-ups receiving massive venture capital funding and incumbent financial institutions acquiring or launching their fintech initiatives.
These initiatives are helping to reduce costs and create a more transparent, simpler model that’s better aligned with the needs of modern consumers. The following are five ways fintech is changing the world of finance.
Customer Experience
Fintech (financial technology) companies influence the banking industry by improving the customer experience. They offer customers more access to their finances and personal information through mobile apps and other digital platforms.
This accessibility means customers can check their balances without visiting a branch and make payments quickly. It also means they can get help with financial concerns with a simple call or email.
A financial platform such as current.com provides users with innovative banking features, including mobile banking, budgeting tools, and the convenience of a connected debit card.
Fintech companies are also working to improve the customer experience by offering more personalized services. They do this by using data analytics to understand their customer’s needs and provide them with customized financial products and services. They’re also working on voice-activated software that will allow customers to communicate with their banks through a digital assistant.
Automation
FinTech companies offer a variety of automated solutions that make banking and financial services more convenient for customers. For example, credit reporting companies allow consumers to monitor their credit reports 24/7 and find loans and credit cards that best fit their needs.
This automation allows financial institutions to reduce costs, increase efficiency, and meet the demands of today’s savvy consumers. The increased transparency and ease of use can help customers better understand products and fees and provide tighter controls over spending and budgeting.
Security
FinTech companies use various tools to protect the security of their customers’ financial information. They use AI for fraud detection, blockchain for secure data storage, and multi-cloud and IoT technology to create more innovative security solutions.
These companies are also making it easier to manage finances, including budgeting and saving. For example, apps offer no-fee banking services and help consumers avoid overdraft fees. Others provide automated savings tools to help consumers save money.
Some FinTech companies use voice-activated software, allowing users to send payments and other requests through a simple microphone command. This trend has prompted some companies to seek bank-like charters to offer a full suite of financial products and services. In addition, these companies are influencing banks to improve their customer service offerings.
Analytics
Using big data, FinTech companies can provide analytics to their customers in real-time. This enables them to track customer behavior and make critical decisions that improve the user experience. For example, using outlier detection to identify significantly different transactions can help to detect credit card fraud in advance.
In addition, FinTech companies can help to create a more diverse and stable credit landscape. To achieve this, they can compile information from social media and other sources to evaluate the requirements of startup companies and borrowers who are not well-served by the banking system.
However, some research has shown that the expansion of FinTech companies can decrease banks’ financial stability. This is due to the competition for deposits between banks and peer-to-peer lenders. This can lead to lower profits and higher operating costs for banks.
Integrations
FinTech is transforming the banking industry by offering new solutions for investors and consumers. These solutions can help businesses increase efficiency, reduce costs, and improve customer service.
These companies provide targeted – often niche – services that address specific financial needs and offer them at lower costs than those offered by traditional financial providers. They also make it easier for end-users to track and analyze their investments with seamless integrations that provide a centralized view of all the data they follow.
They can also extend access to financial services, reaching underserved customers with prepaid cards. They can also improve insurance pricing tools and automate communications with their clients. This enables them to serve their clientele better, increasing the likelihood of retention and loyalty.
