The rapid evolution of global technology has put the banking and financial sectors on edge. Fintech companies and tech giants are reshaping the industry, while customers are demanding greater technological advancements. To survive in this changing landscape, banks must adapt. In this blog, we will explore the key ways banks need to change in order to stay ahead of fintech advances and thrive in the future of finance.
Adapting to the Fintech Revolution: 6 Transformations Banks Must Embrace
1. Become Nimble And Decentralized
In order to stay competitive in the ever-evolving fintech industry, banks must prioritize technological innovation. The fast-paced and rapidly expanding fintech space requires banks to be agile, adaptable, and less centralized. It is crucial for banks to embrace new applications, platforms, and web-based financial services to meet the changing needs and expectations of their customers. By leveraging technology, banks can enhance their efficiency, convenience, and customer experience, ultimately ensuring their relevance and success in the digital era.
2. Combine Security With Blockchain Technology
Banks are recognizing the importance of disruptive technologies like tokenization and faster transaction speeds, and they are actively exploring their potential benefits. While the security and protection that banks offer remain highly valuable, particularly for retail investors, combining these traditional banking functions with the efficiency of blockchain technology can create a powerful synergy. However, the key challenge lies in the speed of adaptation. Banks must strive to adapt quickly to leverage the advantages of these emerging technologies and stay ahead in an ever-changing financial landscape.
3. Incorporate Digital Platforms into Their Strategies
In an ever-evolving fintech landscape, banks must stay up to date with the latest trends and technologies to remain competitive. One area where digital platforms can play a crucial role is in lending. Digital lending has gained popularity as a convenient alternative to traditional bank loans, providing customers with fast and accessible financing options. By adopting digital lending platforms, banks can offer a seamless borrowing experience while streamlining their own lending processes.
The rise of digital banking platforms has transformed customer expectations, with online and mobile banking becoming the norm. As traditional banks face declining foot traffic and increased competition from online banks, integrating digital banking platforms has become crucial for staying relevant. The COVID-19 pandemic further highlighted the importance of digital platforms, with a significant surge in contactless payments, digital registrations, and mobile banking app usage. As a result, many financial institutions have had to reevaluate their branch strategies and prioritize digital solutions.
4. Expand Mobile Banking Capabilities
The current state of mobile banking experiences has room for improvement. Customers are seeking enhanced features and greater control within mobile apps, desiring comprehensive access to a bank’s range of products and services seamlessly integrated into a unified mobile experience. As millennials age, their evolving needs will require a broader array of services, accompanied by a world-class mobile banking experience. Furthermore, members of Gen-Z will set even higher expectations for mobile banking, necessitating continued advancements in mobile app functionalities to meet their demands.
5. Enable Better Connectivity Between Various Services And Tools
In the coming five years, banks will come to recognize the critical importance of connectivity. The fintech movement emphasizes the integration of various tools and services, which stands in contrast to the historically siloed approach of banks. Customers now expect seamless interaction between their financial tools. To meet these evolving demands, banks must enable connectivity with financial software like accounting and payroll applications, allowing for a more integrated and holistic user experience. By embracing connectivity, banks can enhance customer satisfaction and deliver the integrated solutions that today’s customers seek.
6. Partner With Transformative Fintechs
Banks should see fintechs as partners and enablers rather than competitors when it comes to driving innovation. To stay ahead, forward-thinking financial institutions should invest in transformative partnerships and embrace innovative compliance practices. By rethinking traditional risk methodologies and adopting a more open mindset, banks can differentiate themselves and tap into new markets. Collaborating with niche brands can help banks stand out and capitalize on existing opportunities. By adopting this approach, banks can leverage fintech expertise and propel themselves forward in the dynamic financial industry.
The rise of fintech is inevitable and banks need to adapt or risk becoming obsolete. The six ways outlined in this article are just the beginning of the changes that banks will need to make to stay competitive. By embracing technology, improving customer experience, and staying agile, banks have the potential to not only survive but thrive in this new era of finance. It won’t be easy, but it is necessary for banks to evolve alongside fintech if they want to remain relevant and successful. So let’s keep an eye on how these changes unfold and continue pushing for innovation in the financial industry.
Author Bio: Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India’s first app-based credit-line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at [email protected]