In the contemporary financial sector, online banking and mobile money transfers are emerging technologies. The digital wave provides customers with the ability to manage their finances through online platforms. The emergence of digital wallets, cryptocurrency, and cashless payments are some of the privileges. They are introduced by the exclusive and financial technology popularly known as fintech firms.
Fintech Research Company aims to venture into the finance market targeting online payments and cryptocurrencies sectors. The technology disrupts the traditional banking operations. Thus threatening banks and financial institutions. A fintech company is designed to provide fast, effective, and transparent banking solutions. This evolvement is too fast for banks to keep up with the pace.
To cope, banks respond by investing, acquiring, and partnering with fintech companies. The collaboration doesn’t just introduce digital capabilities but reduces the competition in the banking and finance sector. In the recent past, cryptocurrency has dominated the sector, with more businesses adapting to the idea. Today banks fight to develop their cryptocurrencies. With examples of the JPMorgan bank creating their JPM coin (Feb 2019).
Banks partnering rather than competing
Currently, top investment banks and financial institutions in many countries. They have to adapt to the fact that fintech here to stay. It’s the digital platform that provides consumers upper hand and financial intelligence. To fit in, the banks are financing the fintech companies, merging their services and products. To form a platform suitable for both customers and banks.
Banks can now access all fintech products, features, and services. The majority of banks only offer retail banking services. The new collaboration enhances the use of digital consumer payments. This means the bank’s relationship with fintech will grow stronger and dominate the financial sector. With the current trends, other banks will incorporate the fintech idea and grow their services.
Banks mobile banking apps
Due to the digital transformation and the rush to invest in new technologies. Banks are working to develop applications which ease financial transaction for consumers. The target gadget is the mobile phones. They are easy to handle compared to laptops and desktops. The mobile apps are designed to help in money transactions and bank services. However, the mobile apps don’t work or have any comparison with the fintech apps. The fintech apps add value to the bank apps and help in easing financial services for customers. Pay iO has created a technology that puts in place a smooth process of sending and receiving payments for businesses. The fintech companies core mission is to hardness the benefits of Open Banking to empower businesses in the UK. Their aim is to provide cutting edge ecosystems that bring efficiency, new revenue opportunities and cost cutting to merchants. However, this only applies if the banks collaborate with fintech companies.
Why banks introduce mobile apps when they are collaborating with fintech
The lingering question for many consumers being. Is it worth introducing the apps while the collaboration option is open? The bank apps are extra services for bank consumers. They are significant as the clients can access banking services throughout. However, the apps are limited based on the following reasons.
Bank apps are limited to the particular bank which developed the app. The bank might have a limited number of customers. They cannot sell the idea to customers from other banks due to bank policies or security. The idea of creating a unison bank app to incorporate all banks can never work. It will increase competition, which is a threat to some banks.
For fintech companies, there are no restrictions as they have no liabilities to any banks. They offer services to all eligible consumers with banking interests. Fintech platforms can venture into the field since they are global and digital finance platforms.
It’s challenging for banks to develop apps that focus on the same interest. They develop different apps according to the consumer base they have. Banks also can never work to develop a single banking app to avoid competition. They work under regulations to keep consumer data secure, making it hard to create a unison app. For fintech companies, they can focus on a particular service. They can innovate different services for all customers. Fintech apps are designed to manage all financial needs of any customer regardless of the location.
Types of technologies involved in fintech
1. Artificial intelligence (AI) and Machine learning ML
AL and ML are the significant giants in the financial industry today. The developments help in credit scoring, fraud detection, wealth management, and regulatory compliance. Fintech enables business and financial sectors to work agile tools for business growth.
2. Big data and data analytics
Fintech companies use consumer data such as customer preference, spending habits, and investment habits. The platforms use the data to create predictive analytics. The information gathered helps marketing companies predict the consumers purchasing behavior. They learn what they need during a particular season. Many sale companies in the world embrace this idea.
The majority of financial sectors are adopting Blockchain technology. The feature can store all transaction data safely. Blockchain encrypts every transaction preventing any information leakage to the wrong hands.
In conclusion, banks should collaborate with fintech companies to have a wide scope of services. The technology develops innovations beneficial to the bank. The modern customer is equipped, knowledgeable, and needs fast and effective ways to manage their finances.