Today, traditional banks are struggling to retain their customers. They have no option rather than adapting to advanced technologies or lose their customers to agile fintech competition. The digital era has revolutionized every sector including the finance industry.
Daniel Suero Alonso is an advocate of digital banking. In Mexico, he has helped in the digital transformation of 200+ fintechs. His current project was getting a Fintech license for Capital Funding Lab [Mexico].
How fintech has disturbed traditional banking practices?
Fintech, short for financial technology, refers to a broad category of digital technologies that aim to enhance and automate financial services. Fintech has disturbed traditional banking practices in several ways, including:
1. By providing access to financial services: Fintech has made it easier for people to access financial services without having to visit a physical bank. With fintech solutions like mobile banking, digital wallets, and peer-to-peer payment platforms, customers can access financial services anytime and anywhere.
2. By improving customer experience: Fintech companies have redefined customer experience in banking by providing intuitive and user-friendly interfaces that are easy to navigate. They have also introduced personalized services that cater to specific customer needs.
3. By lowering costs: Fintech has made financial services more affordable by reducing the overhead costs associated with traditional banking. By leveraging digital technologies, fintech companies have eliminated the need for physical branches, thus reducing the costs of maintaining them.
4. By enhancing security: Fintech companies have developed robust security measures that ensure the safety of customers’ financial information. With features like two-factor authentication, biometric authentication, and encryption, customers can transact with confidence knowing that their information is secure.
5. By encouraging innovation: Fintech has spurred innovation in the financial services sector, prompting traditional banks to adopt new technologies and improve their services to remain competitive.
Overall, fintech has upset traditional banking practices by providing customers with faster, cheaper, and more convenient financial services that meet their evolving needs. However, traditional banks can match up with the fintech sector and retain customer loyalty.
How can traditional banks match up with the unsettling fintech sector?
Traditional banks can match up with fintech practices by adopting some of the same strategies that have made fintech companies successful. They will need to –
1. Embrace digital technology: Traditional banks should adopt digital technologies that can help them provide a better customer experience. This includes investing in mobile banking apps, online account opening, and digital payments.
2. Collaborate with fintech companies: Traditional banks can collaborate with fintech companies to gain access to new technologies and expand their customer base. You can do this via acquisitions and mergers.
3. Personalized customer experience: Fintech companies have been successful in providing personalized experiences for their customers. Traditional banks can do the same by leveraging customer data to tailor their products and services to individual needs.
4. Streamline operations: Traditional banks can reduce costs and increase efficiency by streamlining their operations. This includes automating processes, reducing manual tasks, and eliminating redundancies.
5. Focus on innovation: Traditional banks should focus on innovation to stay ahead of the competition. This means investing in new technologies and exploring new business models to deliver better value to customers.
By adopting these strategies, traditional banks can effectively match up with their competitive fintech sector and continue to thrive in the digital age.