It is almost the end of the year, and we can already pinpoint some topics that came up throughout 2019. The most important is still around banks and the lack of digital transformation. Re-designing the 21st-century bank is not an easy mission, and most FinTechs prove how their business model works better with a growing number of complex consumer needs. FinTech sector brought up the real issues with traditional banking – its utter need for innovation, lack of digitalisation, and better solutions for consumers and businesses.
FinTech initially was looked at as an easy-to-use and cheaper model to lower costs and remove back-office complexities. However, it took over consumers lives and businesses’, and soon it set the bar quite high. The platform model FinTechs use is still a tech tweak, and business infrastructure traditional banks struggle at implementing.
With that in mind, during 2019, more and more banking giants acquired or teamed up with FinTechs to cover more extensive parts of the market with their solutions: payments, technology, KYC and compliance solutions. The way banks currently interact with their customers must undergo fundamental changes. Evolving and showing interest in upgrading the services and products is paramount to customer loyalty.
Most of the bad reputation banks gathered is not only from the retail aspect from the B2B sector, which has not seen any updates in terms of transaction speed and protocols. Disruption in banking is transactional and about the microservices. So far third-party FinTechs have been more successful at implementing models and platforms that can move B2B money faster than traditional banks do it. On top of that, advanced risk management tools and a personalised digital experience make businesses flock to FinTechs.
In the end, what matters is a low cost of a transaction, improved solutions, safe tech, swift processes. While banks are still dwelling on whether FinTechs are right or wrong, the latter is overtaking the banking sector. From consumers wanting a better digital banking experience to businesses seeking B2B payments, traditional banks still have a long way to absorb and implement FinTech’s model.