Digital and technological advancements led to the utilization of technology for finance management. With the opening of an ATM by Barclays in 1967, the trend of finance technology started. Consequently, the term “financial technology” (Fintech) emerged as a defining concept in the industry.
In recent times, the fintech industry has garnered extensive backing. And it is now prevalent worldwide. In addition, it has proven to be highly advantageous for financial institutions. Banks are increasingly embracing fintech solutions. It is helpful to enhance their service offerings. They use it to deliver top-notch banking experiences to their clientele.
Traditional banking faces limitations due to its adherence to antiquated money management practices. They are excessively rigid and time-consuming. The services provided by conventional banks need to be updated and are more expensive compared to banks that use the latest technological advancements in the industry.
Traditional banks are experiencing limited growth. It is due to the complex structure and functions involved in offering services. It ultimately hinders customer satisfaction. Unfavorable customer experiences result in dissatisfied customers.
Numerous risk factors compound these challenges. They include:
- Inadequate security
- A high chance of data breaches
- Concerns regarding the safety of funds
The traditional banking system is full of restrictions. Some major banking issues led to the fintech revolution.
Some of the banking Issues that led to the Fintech Revolution are:
- High regulations on every step of banking operations
- The incurrence of huge operational costs
- Lack of technological advancements in the old systems
- Increase in poor customer experience
- Increased concerns about data security
Top Must-Have Fintech Solutions for Banks
E-wallets serve as digital wallets. They facilitate online payments through smartphones. By incorporating their card details into the wallet, users can establish a connection with their bank accounts. This gives them access to an array of services it offers.
In addition, electronic wallets are experiencing a surge in popularity within financial services. This is a strong indicator of substantial growth opportunities for banks. Thus, banks must incorporate e-wallets as an essential fintech solution.
E-wallets offer a wide range of convenient features. They include:
- The ability to open bank accounts,
- Facilitate instant cash-ins and cash-outs,
- Assist in bill payments,
- Enable top-ups,
- Enable peer-to-peer transfers,
- Support split payments,
- Allow balance inquiries,
- Facilitate self-transfers,
- Help in booking tickets,
- And offer scheduling payments.
Google Pay, Apple Pay, and PayPal are popular digital wallets today.
1. Mobile Banking
Mobile banking refers to the utilization of a smartphone application. It conducts banking activities. Smartphones and internet connectivity are in widespread usage among customers. Thus, traditional banks need to embrace mobile banking to remain relevant.
Utilizing the mobile banking app enables the bank to extend its banking services. This convenient and seamless platform assists users with their banking transactions. It fosters increased efficiency for both customers and the financial institution. Moreover, the mobile banking app serves as a valuable tool for banks. It expedites customer acquisition processes.
2. Agency Banking
Agency banking is a fintech innovation. It connects individuals with access to banking services with those without. This revolutionary solution enables banks to expand their reach to geographically underserved regions. Establishing a physical branch may be challenging there. By leveraging the support of authorized agents, agency banking empowers financial institutions. It enables them to extend their offerings and cater to a broader customer base.
Agency banking allows banks to enhance customer satisfaction while diversifying their customer base and income streams. Moreover, agency banking empowers users by providing them with a convenient platform. It helps them to carry out an array of transactions, such as:
- Cash deposits,
- Cash withdrawals,
- Balance inquiries,
- Top-ups,
- Loan repayments,
- Bill payments,
- Utility bill settlement,
- Tax payments,
- And government fee settlements.
3. International Remittance
International remittance is a convenient and efficient service. It enables individuals to transfer money across different countries swiftly. This service proves to be economical for both senders and financial institutions. It fosters cost-effectiveness. Moreover, it significantly enhances customer satisfaction. Thereby, it plays a crucial role in customer retention.
Banks must establish an international remittance service. It is in the light of the expanding patterns of global migrations. Such a service will be a valuable asset for banks in enhancing financial inclusion. It caters to the needs of current clients. It further attracts new clientele. Thereby it provides a competitive edge in the market.
4. Smart Chip Technology
Smart-chip technology is an ATM card equipped with smart-chip capabilities. It mitigates security risks and eliminates unnecessary instances of misuse. This advanced smart chip operates on every transaction’s Time Password (OTP) principle. It enhances its security measures. The OTP generated is exclusively valid for a solitary transaction. It lends unparalleled security to the cardholder.
Smart-chip technology enhances customers’ sense of security and satisfaction. Moreover, it fosters a culture of trust and accountability among them.
5. Open Banking
Open banking refers to utilizing application programming interfaces (APIs). It facilitates the sharing of financial information and services with external entities. An open banking platform empowers financial institutions. It allows exchanging a user’s banking data with a third party through an API.
Furthermore, an open banking platform facilitates connectivity between financial institutions and fintech applications. It encompasses peer-to-peer transactions, cryptocurrencies, investment portfolios, etc.
Also Read: How Fintech Startups Are Affecting Banking Industry
Summing Up
Financial technology has completely changed the landscape of financial transactions. In today’s world, Fintech functions not as a rival. But it acts as a collaborator and enabler to traditional banks. The aim is to establish a harmonious relationship. It will bring about a positive transformation within the financial ecosystem.
Banks and Fintech could overcome the challenges by forging this strategic partnership. These are the challenges traditional banks used to face. This alliance will provide enhanced solutions. It also will deliver improved competencies to meet the demands of customers better. So, the combined forces of banks and Fintech will impact customers’ lives. This applies to those who are relying on financial services.
Currently, there exists a harmonious coexistence between traditional banks and Fintech. As such, banks find themselves in a state of transition. They shift from conventional banking practices towards more sophisticated technological approaches. This transformative undertaking has become workable by the groundbreaking fintech revolution.
