As technology has evolved, we have seen the impact on traditional industries. In some cases, it is safe to say technology has actually revolutionized an industry. One such industry being affected by the continually emerging technology is the banking industry. This leads to the question of whether banks will be replaced by techfin companies or if they will become fintech institutions.
Fintech companies represent the intersection of finance services and technology such as when financial institutions offer digital-based services to provide a better experience for their customers. These types of services lead to reduced cost, increased revenue and overall less friction. An example of this would be traditional banks offering mobile deposit services or payment services such as PayPal.
A techfin company is a tech-based company that starts to offer financial services. Examples of this would be Apple’s offering of their virtual wallet and Apple Pay. Amazon has even talked about breaking into the financial sector by offering Amazon Pay and Amazon Cash, which would be another example of techfin.
Technological solutions to banking have become very popular and in many cases indispensable. Mobile deposits, money transfers, money sending, and even bill payment has made it possible for a person to almost never to step foot in a physical branch of their bank.
As more techfin companies evade the market, they have the opportunity to thrive within specific financial functions. There will still need to be the compliance and services provided by traditional banks, but there is a demand for them to adapt to the needs and preferences of the consumer. This necessary adaptation could also lead to further collaboration between the traditional institutions and emerging tech companies to create stronger entities.
Traditional banks will have to respond quickly to change, innovate, create consumer-centric solutions and implement digital infrastructure. These characteristics along with their overall recognition, trust, capital, and compliance are essential for them to stay relevant and succeed in today’s ever-changing technological landscape.
Championing collaboration between tech giants and conventional financial institutions is increasingly important. While competition in the industry cannot be avoided entirely, by leveraging customer insight, advancing analytics and adapting to changes in the digital arena, traditional banks can secure their place in the future of financial institutions.
The Future of Traditional Banking
