The way you bank is likely a lot different than it was for your grandparents or your parents. Now, more people rely on mobile banking than at any other time in history. Moreover, this is only one of the significant results of the shifting nature of financial services. In addition, the past decade has seen a rise in financial technology, or “FinTech.” This industry comprises companies that use technology to make financial services more efficient. Plus, it’s making a big impact on how we bank, shop, and invest.
This article will detail some of the most notable ways that FinTech is changing financial services and what that shifting nature looks like. To learn more about utilizing FinTech in business, leaders can also register for FinTech courses to learn about the latest trends and technologies and how to adopt them.
What is FinTech?
FinTech is an industry made up of companies that use technology to improve financial services and make them more accessible. This can include anything from mobile banking apps to online investing platforms.
How FinTech is Changing Financial Services
While FinTech is a relatively new industry, we mentioned that it is already changing how we bank, shop, and invest.
Here are just some of the ways.
1. More accessibility
One of the most notable ways FinTech is changing financial services is by making them more accessible. In the past, many financial services were only available through brick-and-mortar institutions like banks or investment firms. But now, thanks to FinTech, more people can access a wide range of financial services online or through their mobile devices.
This is particularly beneficial for those who live in rural areas or who don’t have the time or ability to visit a physical bank branch. But it also makes things more convenient for everyone else as well. For example, you can now transfer money to someone overseas with the click of a button rather than waiting for days or weeks for the transaction to go through.
What’s more, thanks to the rise of digital banking and mobile apps, people can now manage their finances on the go. This means they can check their account balances, transfer money, and even pay bills while they’re on the bus or in line at the grocery store.
2. More choices
Another way FinTech is changing financial services is by giving people more choices. Before, people would typically get their financial services from banks or other traditional institutions. But now, a wide range of FinTech companies are offering alternative options.
For example, some who are looking for a new place to invest their money might consider an online platform like Acorns or Betterment. Or, if they are looking for a way to send money overseas, they might use a service like TransferWise or WorldRemit.
The bottom line is that thanks to FinTech, people now have more choices when it comes to financial services. This results in better prices and more tailored solutions for consumers.
3. Improved security
FinTech is also changing financial services by making them more secure. Throughout history, there have been several high-profile security breaches at traditional financial institutions. But thanks to the latest technologies, FinTech companies are able to offer a much higher level of security.
One example is how many FinTech companies now use biometric authentication to verify someone’s identity using their unique physical characteristics (like their fingerprint or iris). This is far more secure than traditional methods like passwords, which can be easily guessed or stolen.
Additionally, FinTech companies often use cutting-edge encryption technologies that make it very difficult for hackers to access people’s data. If a breach does occur, these companies are typically much better equipped to deal with it thanks to their sophisticated security systems.
In short, FinTech is changing financial services by making them more accessible, with more choices, and improved security. This benefits both consumers and businesses alike.
The Future of Financial Services
As for what we might expect financial services to look like in the coming years, we anticipate that the trend toward digitalization will continue. This means that more financial services will be moving online and onto mobile devices.
We might also see that traditional financial institutions will increasingly partner with FinTech companies in order to stay competitive. For example, banks are already teaming up with FinTech startups to offer their customers mobile apps and other digital services.
Lastly, we predict that FinTech will help to make financial services more inclusive by providing access to those who the traditional system has previously underserved. For example, many FinTech companies now offer banking services to people in developing countries who don’t have access to a conventional bank account.
Challenges for Financial Institutions
While the rise of FinTech has been great for consumers and businesses alike, it has also created some challenges for traditional financial institutions. After all, if people can get the same services from a FinTech company at a lower price, why would they bother using a bank?
This is just one of the challenges that financial institutions face as the finance world continues to change.
They will also need to seek out ways to keep up with the latest technologies and stay ahead of the competition. But if they can do so, they’ll be well-positioned to thrive in the new world of FinTech.
So, that’s just a brief overview of how FinTech is changing financial services. As you can see, there are many advantages for both consumers and businesses. While there are some challenges for traditional financial institutions, they also have the opportunity to thrive in this new landscape, particularly if they focus on staying up-to-date with the latest in FinTech.