Fintech – Making banking intimate

New entrants to the market, new business models, changing customer expectations and fragmentation of traditional services, all contributing to put traditional banks under pressure. Cash is no longer king; mobile payments are increasing in popularity and no longer is the current account the only thing one uses to manage money.  So, does it mean a death knell to banks? No, rather a storm is sweeping today’s banking world with traditional bank branching services moving online. Apart from merely increasing customer base and market shares, banks are leveraging the tech innovation of startup partners to improve their operations and reducing costs.  Fintech, the financial technology, is powering the major changes in the current banking sector.  It is mostly start-up technology and financial expertise firms, providing domain specific products and services that are already provided by various traditional financial institutions such as banks, asset management companies, and insurance companies.The technology boom has slowly moved the banking domain from internet banking to mobile banking and now moving towards digital banking. Mobile gadgets, telecom, and data services at affordable rates, regulated e-commerce platforms assuring security with growing customer awareness and expectations have conquered the market. With this technology boom, competition in the banking sector became extensive and included non-banks who provided products/services in the niche areas of banking. Many banks have now started feeling the pinch of growing customer acceptance of non-banks or start-ups, threatening them with their competitive high-technology and low-cost products to raise the bar of expectation.Fintech has created competition — real competition, not the pseudo variety between different banks all offering the same thing at the same price. No longer is it a choice between Bank A and Bank B, where there is little to no differentiation between the product or service that they offer. Fintech firms mainly focus on identifying, specializing, and excelling in a niche product/ service area, providing customer-centric operations, innovation, and cost-effectiveness, and reducing delivery turnaround time. FinTech can offer solutions that are efficient and effective at lower scale which will benefit small businesses and provide them with increased access to more diverse funding options. Innovative FinTech products can be better tailored to the needs of small businesses. These include marketplace (peer‑to‑peer) lending, e‑commerce finance, invoice finance, online supply chain finance and online trade finance. It can also help all businesses through improved payments systems, customer relationship management and invoicing and collections.Thus, banks that once found themselves in a race against each other are just as much running a race against time. And investors will want to pay close attention as financial technology braces to take off like never.

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