In just a few years, fintech has experienced quite the boom. Four short years ago, fintech accounted for 5% of personal loans. Now, that has skyrocketed to 45%, and the future of fintech appears robust. The COVID-19 crisis has only magnified the ways fintech has become more useful for the average consumer. Partnering with the right digital innovators and fintech companies can help banks prosper. It is all about financial evolution.
Fintech and Banks
Banks have already adopted many of fintech’s best features. When you deposit a check from your smartphone, that’s a fintech development. All of those financial apps are part of the fintech revolution. Worldwide, people are ridding themselves of bank accounts in lieu of payment apps. Fintech is changing the nature of money itself. Consumers are using fewer bank-issued credit cards and exploring digital currencies.
In the past, many banks saw fintech mainly as a way to lower costs. Digitalization was about saving money, and offering new tools to consumers was less of a consideration. Now, banks must make customer experience and efficiency paramount through fintech, and there is no time to lose. Since the coronavirus, there is an urgency to these changes that did not exist before.
Understanding the Customer
Fintech helps traditional banks understand their customers in ways they could not do before. It comes down to good metrics and data analysis. Customers all want financial institutions to know them, value them, protect their data and make banking as simple as possible.
Fintech companies are thriving because they possess the agility to identify customers wants and needs, and come up with innovative products. Banks that fail to partner with fintech companies and digital innovators to tap into these insights could find themselves falling behind. The good news is that traditional banks recognize this and are collaborating with their erstwhile rivals in fintech.
The Future of Fintech
Fintech was already thriving by early 2020, but the coronavirus pandemic accelerated the trend. Banks found digital use increasing by 50% or more just weeks after lockdown, as working from home and other restrictions went into effect. There is no going back. Most consumers are hesitant to go to a physical bank or ATM, and they want to do business with companies that accept contactless payments.
Some leading financial observers believe the pandemic has unleashed a demand for fintech in personal banking that otherwise may have taken several years to reach this level of fruition.
The industry will continue to address the pain points so many consumers have with traditional banking. So, what does the future of fintech and its application to traditional banking hold? Here are some key areas already in the midst of rapid change:
- Tremendous demand for mobile application growth
- Products and services designed primarily for mobile device use
- Uncomplicated ways to move money between accounts
- Solutions for loan qualification for customers with poor credit
- Expansion of peer-to-peer lending
- Contactless credit card payments
- Education for reaching financial goals
Increasingly, the lines between fintech and traditional banking will continue to blur. Switching to digitalization quickly can help you meet consumer needs. Banks that don’t have a sound digital strategy in place are playing catch-up at a time when consumers are demanding a sea change from their financial institution.
At Lumin Digital, we provide customized client solutions in the digital banking space so our customers (and in turn, your members) can take advantage of the latest fintech innovations. Our cloud-native platform lets your financial institution personalize the user experience based on its unique needs and build strong relationships with its customers. In addition, our cloud-native platform lets banks avoid any downtime with their users. The future of banking is seamless. Look no further than Lumin Digital to take you there.
Jane Meggitt’s work has appeared in dozens of publications, including USA Today, Zack’s, Financial Advisor, nj.com, the Houston Chronicle and The Nest. She is a graduate of New York University.
References
- Wharton School of Business — Why Fintech Is Disrupting Traditional Banking
- KPMG — A Digital Decree_Peter Torrente, Mark Twerdok, Celeste Diana
- PWC Global — Consumer banking braces for disruption
