Innovative advancements in virtually every sector, and in particular, information technology, have revolutionized the way things are done. Legacy products and systems especially have been replaced by innovative technology in a number of industries often causing a great deal of heartburn to those accustomed to the old way of doing things. However, in many situations, both the old and the new can happily coexist and users don’t have to make either/or choices.
1. Collaborate Not Replace
The current financial services companies or institutions like banks and credit unions have tended to view the entry of the fintech companies as disruptive competitors who have the potential to threaten their very existence. As a result, many of these banks have tended to build up a wall around them to try and lock in customers who might have been tempted by the efficiency and transparency of the digital services ushered in by the fintech companies. However, it can be really helpful for the conventional financial intermediaries, especially the really large global institutions, who lack the agility required for the implementation of digital technology, to consider collaborating with technology providers to bring the level of their services up to the expectations of the contemporary digital customer.
Many smart players in the financial services industry have been quick to realize the direction in which the winds are blowing and have quickly converted the rapid growth of the fintech companies from a challenge to an opportunity. The results of the collaboration between traditional financial institutions that have a large base of customers, a varied product offering, and a rich heritage and the fintech companies that provide superior user experience, data enrichment, and modern technology platforms have been immensely beneficial to both the collaborators and the customers.
2. Fintech Ushers in Enhanced Convenience and Security
There is no denying the fact that the most visible benefits of fintech for customers are convenience and security of transactions while traditional institutions get the opportunity for bringing in the new and improved systems and products that deliver improved performance and increased profitability. According to https://www.huffpost.com, the overall boost in efficiency, transparency, speed, and performance is achieved with the use of advanced technologies like AI and highly-secured networks that make it possible for speeded up processing of credit cards, loan processing, money transfers, etc., all with extra layers of security and removal of consumer pain points.
Digital wallets, for example, has ushered the sort of convenience that customers would have never dreamt was possible. When traveling abroad, people are normally forced to spend valuable time looking out for currency exchange bureaus and then paying extra fees for the facility at the airport or elsewhere. With multi-currency digital accounts providing online access to all the customers’ financial accounts, it is now possible to convert currencies automatically and carry out the desired transactions securely and quickly without carrying a physical wallet full of bank notes.
Cryptocurrencies like Bitcoin and many others that have found widespread popularity have already had a transformational impact with their distributed ledger technology that ensures quick and high secure cross border financial transactions at a fraction of the cost and time normally taken by conventional banks. This kind of a digital currency that is independent of governmental influence already has governments all over the world scrambling to get on top of the situation and trying to enact legislation to control and regulate it. The emergence of digital trading exchanges and concepts like Initial Coin Offering (ICO) that has allowed companies to raise funds without going through the conventional channels have already created a major ripple in financial intermediation. At the heart of cryptocurrency trading is fintech that encodes the funds, personal data, and transactional data in cloaks of impenetrable security making it impossible for third-parties to intervene and divert payment or commit fraud. The consumer who is already delighted with the ease of transactions and the reduction of transactional cost is extremely receptive to security conveniences like biometric and facial recognition technologies making account logins easier and more secure.
3. Cloud Data Management Made Easier
The way to retain customers and make them your brand ambassadors is to offer experiences that are genuinely customized and personalized to the highest degree for them. As may be imagined, this kind of personalization requires the collection and management of huge amounts of data. Fintech makes it possible for organizations like national debt relief to have the ability to collect, analyze, and manage the huge amounts of data on the cloud required to provide the entire customer insights necessary to deliver custom services and the personalized user experience along with the high levels of transactional security that are demanded by contemporary customers. It is natural for every customer to be pleased by the organization anticipating his needs and satisfying them even without asking by the offer of products and services that are not only personally relevant but also offered at the most optimum times in the language that the individual most appreciates. The implementation of fintech by legacy financial services can take them out of their normally-reactive mode and empower them to offer onsite as well as online personalized experiences that will not only aide retention of loyal customers but also convert them into advocates helping to draw in more customers.
4. Fintech Artificial Intelligence Driving Diversification and Cost Reduction
It is anticipated that in the next few years, as much as 85% of all interaction with the customers of financial services entities will be accomplished without the intervention of humans. Tasks driven by AI will free up valuable human assets to focus on things that do matter more for enhancing the diversification of portfolios and enhancing the personalization. Companies like Robot Advisors employ automated wealth management services to provide their clients with the required financial advice, especially those looking for low-cost solutions. The AI technologies used by them can generate a personalized portfolio of services within minutes and provide them with services that were only possible earlier by human intervention.
5. Payments, Clearing And Settlement Services.
Traditional banking institutions provide payment systems to settle financial transactions. Typically, these transactions consist of transferring money from a buyer’s bank account to a seller’s bank account. Payment transactions supported by the traditional system include purchases with debit and credit cards through wired terminals and electronic transfers. Fintech has developed services to complement the relationship between the widely-used traditional banking payment system and the final customers. Fintech developments provide services that overcome some of the restrictions of the traditional payments system. Some of these restrictions are geographical barriers, the need to go to a bank to carry out transactions, and bank’s service hours. These services are digital and mobile wallets, mobile points of sale, and peer to peer transfers.
6. Investment Management Services
Fintech companies have adapted technological advancements to develop innovative investment and foreign exchange services and to expand the customer base for these financial products. Certainly, both traditional and fintech investment companies offer broker-managed trading and pre-designed investment plans. However, fintech innovations include online and mobile investment platforms, automatized investment counseling, investment simulation platforms, and foreign-currency trading backed by virtual currencies. In addition to being innovative, fintech investment companies often target underserved and unserved customers. On the one hand, the user-friendly investment platforms may be attractive to customers who are not attended by traditional companies. On the other, fintech investment and foreign exchange platforms charge lower commissions and fees than traditional companies. Moreover, fintech foreign exchange services perform transactions both faster and at more favorable exchange rates. This subsection provides an overview and description of the services provided by trading, investment and foreign exchange fintech companies, and their associated risks.
Conclusion
Even though many established financial intermediaries are trying hard to compete with fintech companies, it can be better for consumers if legacy financial services and fintech establish collaborations. Even millennials who are digital-savvy prefer a combination of digital accounts with branch access along with convenient, fast, and personalized services. This is best delivered by the integration of fintech with legacy systems.
Author Bio
Marina Thomas is a marketing and communication expert. She also serves as a content developer with many years of experience. She helps clients in long-term wealth plans. She has previously covered an extensive range of topics in her posts, including Money Saving, Budgeting, Cryptocurrency, Business debt consolidation, Business, and Start-ups.
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