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The accessibility of technology around the globe has caused disruption in every sector.
From incorporating new innovative practices to stay a step ahead of the competition to streamlining processes through automation, it seems every business has had to adapt rapidly.
So is Fintech really reshaping the financial service industry, or is that a myth?
Here's what you need to know.
What is Fintech?
In simplest terms, fintech is financial technology. There are a lot of finance-related services that fall under this umbrella, from daily banking to investing.
Fintech is any form of connected financial services delivered over the internet via software or applications and can apply to both B2C and B2B product offerings.
The surge of fintech goes hand-in-hand with a generational shift in the consumer world. Millennials are overtaking the marketplace and have more of a focus on using technology-based solutions than traditional approaches.
Furthermore, millennials are more dialed in with experiences over things and drive the gig economy.
So yes, it's true that fintech is reshaping the financial service industry.
Here are some of the reasons why.
The days of going in for a meeting at the bank to see what mortgage rate you would be approved for are long over.
Processes are streamlined and more accessible to consumers without help from a bank employee.
Some services are changing the financial world completely.
Rather than accepting a poor credit score and working for years to correct it, consumers can now use professional credit repair software from home. This service allows them to find and dispute negative items that would otherwise fly under the radar for years.
More people are using robo-investors instead of a traditional investment consultant. Additionally, consumers are taking a more social, open route to investing by engaging in self-led social investing with their friends and family.
While these approaches to financial management are still developing, the financial industry could look very different ten years from now as a result.
Online Banks and Money Transfers
Online banking is a must-have service for traditional banks. In a recent survey conducted by PWC, 85% of respondents were concerned that their traditional approach would be overshadowed by standalone fintech applications.
As a result, many conventional finance businesses are engaging in partnerships with fintech institutions to stay relevant.
So while the ability to offer online banking is essential for success in today's finance industry, standalone online-only banks are causing significant disruption.
People are questioning the fact that they often have to pay high service fees to access their own money. Without the overhead costs of running a brick and mortar bank, online banks are able to reduce that charge drastically.
Furthermore, people are gravitating toward services like PayPal and Venmo to move money around. The introduction of the Apple Card will also revolutionize credit options. This secure card offering doesn't charge late fees or international exchange fees, making it a massive disruptor in the financial world.
A Customer-Centric Approach
The overarching theme with fintech disruptions is that it's forcing the financial service industry to take a customer-centric approach.
In other words, giving customers what they need to feel valued and to build loyalty.
For many financial services in the industry, creating omnichannel accessibility is a top priority.
Being accessible not only through a branch or office, but also through social media, text, and other avenues is key. There needs to be consistency between both online and offline interactions. As a result, there's a ripple effect that necessitates the use of chatbots and automation.
Truth: Fintech is Reshaping the Financial Service Industry
It's no myth: fintech is reshaping the way we handle money. Financial service businesses will need to adapt and think ahead to stay relevant in the years to come.