What’s the biggest impact of Fintech? Ask this question around and you’ll be amazed by the answers you will receive. Fintech means different things to different people, for banks its a technology enabling growth, for investors, it’s where the future is, but ask a customer and for her, it’s a technology which has made handling finances much easier than ever. From easing payments, accessing financial products to keeping track of investment portfolios, Fintech has made things much easier. The best part, it’s just the beginning and the best is yet to come.
Let’s understand why customers primarily started availing services from banks and financial institutions. Banks provided the much-needed security to the cash. Historically, people would bring in gold and silver and keep it with the banks, then moved to lockers and vaults, then to cash and eventually to digital money. Banks provided security and complete peace of mind.
From being financial security providers, banks started providing convenience and offered ATMs, online and mobile banking services. The last basic customer requirement was the need for speedy transactions and that was served by RTGS, IMPS and other innovations. These 3 requirements – security, convenience, and speed were the basic expectations from customers and remain the same till date. All the innovations in the financial sector at aimed improving these for the customer.
The Fintech Way
All Fintech disruptions in the industry are aimed at improving these 3 basic requirements and in the process improve overall customer experience. Some fintech innovations have been able to solve one or more of these and innovations which have solved all the three requirements have been embraced by the customers with open arms. For example, cryptocurrencies have got a lot of unwanted media attention lately with fingers being pointed on the security aspect. No wonder, the initial interest on cryptocurrency has waned and it’s unlikely to pick up anytime soon until the security issues are addressed.
Talking about convenience, imagine the time when during travel, your forefathers would carry gold coins hidden in multiple layers of clothing, then came cash, traveler’s checks and now you transact via plastic money or even digital wallets. That’s Fintech working hard to provide security to your money, convenience, and speed. All in one, No wonder, you won’t even think of carrying wads of hard cash during travel.
Fintech has also raised the bar of customer expectations. Traditional banking operations didn’t focus much on enhanced customer expectations except for the high net-worth customers. Fintech has changed that, every customer, big or small gets the same level of customer service, thanks to the robust technology at the backend which serves personalized service to every customer.
Currently, most commonly customers engage with Fintech via payments and fund transfers. That’s billions of transactions already nibbling away the traditional banking business. Payments and fund transfers were fortresses held by banks and it took anywhere between a few hours to days to process payments via traditional checks. Do modern customers have the patience? They are used to instantaneous payments and transfers via mobile wallets.
Fintech is continuously improving the delivery of financial services. Banks for long, have served a limited pool of customers, Fintech helped widen the customer base. Millions of unbanked customers came into the banking fold. Not just that, Fintech helped many SMEs and retail customers get access to credit. Customers can now access credit on the fly, during making costly purchases, based on the need. With real-time, paperless approvals, getting credit is easy thanks to Fintech. Customers are also able to evaluate multiple providers and make smart informed decisions, thereby improving the overall buying experience.
The Future Ahead
Fintech has generated tremendous interest and excitement in the banking and financial services space. The world over banks and financial institutions are rushing to embrace Fintech in its true form. Like any other disruptive change, it is still in its infancy. Fintech is yet to move beyond lending, payments, fund transfers, marketing communications and fraud detection. But the future looks promising.
Fintech has for sure raised the bar of customer expectations. In future, customers will not do business with not the biggest bank but with the most customer-friendly bank. Let’s hope Fintech is able to live up to its hype and deliver on the expectations.