As FinTech and banking collaborate to deliver greater value, it is time to watch how FinTech partnering with banking operations will evolve to redefine the future of the financial industry.
Although traditional banks have deep concerns regarding the constantly evolving digital landscape, many other banks are developing using FinTech innovations. Traditional banks and financial service companies, at large, consider each other as valuable partners on some parameters to reach new goals or increase engagement with customers.
The FinTech market expects to grow from 2022-2027 at 25.18%. By 2026, the market will be worth US$324 billion, reports Market Data Forecast in Global FinTech Market Research Report. The market study shows that FinTech services offer more opportunities, and for banks, the inclusion of FinTech tools into the banking processes is imperative for growth.
Why Fintech Association Is Essential for the Future of Banking
The concept of FinTech tools in banking services, solutions, and operations will benefit banking products and processes for savings, trading, and business services. Traditional banking services are adopting technology-based services because that’s the way ahead for the banking industry.
Many businesses see opportunities in leaving the legacy components of traditional banking and offering advanced targeted solutions with better servicing to consumers and other companies. The evolution of how businesses today manage banking and financial services also highlights one of the reasons why FinTech and banks should work and collaborate.
Here are a few evident technological changes to help businesses thrive in banking.
FinTech to Banks: The Development of Cloud
While businesses battled the challenges of the pandemic, the cloud became a critical facilitator, and the FinTech industry leveraged its potential. Cloud-based FinTech tools enable the rapid maturing of traditional financial services to digital technologies.
Thanks to banking tools in the cloud, customers can now access their banking information from any device. They can access their banking details, and the financial information can be updated in real-time. The cloud has allowed for faster transactions and easy access. From a security perspective, cloud integration in technology tools in banking has provided stringent measures to protect customer data, provided advanced firewalls, intrusion detection, and prevention technologies, data encryption, securing endpoints, audits and testing, and network security through VPN (Virtual Private Network) to all banking services.
FinTech Helps Banks Find Better Reach
FinTech, with its cutting-edge innovation, provides tailored solutions for financial sector end-users and consumers. Due to financial tools, banking can progressively work with data analytics to provide better services, offering multiple online and mobile banking options and enabling data automation to reach maximum customers easily. Due to these reasons and associated benefits, banks now focus on implementing the most up-to-date finance technologies to improve operations and security measures. For instance, APIs have become essential for open banking solutions. All of these factors indicate how FinTech is vital in the banking industry.
Fintech to Banks: A Better Approach to Financial Transactions
FinTech has revolutionized how bank transactions are made and completed in the wake of online payments through internet banking and mobile apps. Virtual payments allow customers to make transactions without needing credit or debit cards. This has reduced the usage of physical payment methods and has resulted in seamless payments, faster services, quick response, and security. In addition, the boost in digital transactions in the banking sector also aids businesses in data gathering. Instant data gathering paves the way for customizing financial and banking needs, both services and product vise. As a result, FinTech will assist banks in developing cost-effective business setups while creating new revenue streams.
FinTech to Banks: The Blockchain Advantage
Finance technology continues to add value to the banking industry by integrating Blockchain into banking operations. The Blockchain infrastructure enables banking companies to have control of all online transactions and data, controlling and removing third-party integration. Blockchain is now safeguarding properties and decentralizing functionalities to help prevent fraudulent activities, phishing attacks, and social engineering attacks and protect online payments.
Big data with AI & ML further allow banks to monitor risks throughout transactions to offer smooth banking experiences, determines consumer demands and preferences, and assist in providing customized products and financial services.
FinTech to Banks: Data Security
Data security in the banking sector is essential during online transactions. FinTech tools are designed for extra layers of security and protecting private data from data breaches. While banking and financial operations strive to comply with security and privacy regulations, adding a FinTech tool in all kinds of transactions gives an added layer of security in most cases.
Banks can leverage the constant digital changes with Fintech tools to capitalize on opportunities and drive revenue. This way, banking businesses can provide efficient banking services that engage with customers effectively.
Providing additional Functions and Features
A collaboration between a FinTech company and a banking services company allows the bank to offer its customers helpful web and mobile app features and functions. With the help of enhanced technologies such as AI, chatbots, and virtual reality, banks can now improve their online engagements for a smooth banking process, seamless customer services, and mobile app services to expand banking modules and options for customers to use from any location.
Online banking features and apps are more user-friendly and accessible today for consumers to make the most of various banking needs. FinTech tools can help improve user experiences to provide consumers with an intuitive and easy-to-use program. This allows banks to address their biggest challenge today – retain customers in a crowded market.
With the successful digital transformation of the banking sector, the usage of technology tools costs less every year. Digital banking has become cost-effective, as technology integration has minimized long queues of customers, paperwork hours to complete, and other manual banking tasks. Technologies like automation, machine learning, analytics, and more have reduced multiple-level bank jobs and converted them into one umbrella of operation. Data is easy to gather with automation, and analytics makes monitoring possible. There are more innovations in banks with FinTech tools resulting in reduced operations costs.
The Future of The “Fintegration” Trend?
Banks realize that the landscape is changing, and to survive, they need to evolve. While some banks have already succeeded in developing with the change, some are still slow to embed innovation in their business process. Over the next few years, banks will witness a strategic shift to purpose-driven banking. Traditional banking services and practices will be overrun by increasing demand for online operations, even more than now.