How Fintech Is Changing Traditional Banking?
Fintech apps have been filling in the gaps in traditional banks for years, and they’ve also been meeting the need for more flexible payment systems. As time goes on, fintech is becoming more integrated with standard financial services. For example, most banks and insurance companies plan to work together with fintech companies. On the other hand, banks are constantly investing in new technologies, which makes fintech more competitive.
The global fintech business is growing quickly because of these two things. It will likely be worth more than $300 billion by 2023.
Knowing the pros and cons of fintech custom software app development is very important if you want to start your own finance-related business. Now it’s time to take a close look at how fintech is changing the future of standard banking and what its future holds.
We’ll talk about the pros, cons, and uses of financial technology in this post to give you a sense of how the rise of fintech will affect standard banking in the future.
First, let’s talk about what’s wrong with standard banking.
Table of Content
- Problems that traditional banks have to deal with
- Fintech: What It Is, What Its Pros and Cons Are, and More!
- What does big business do about fintech?
- What we did to help Khatabook make their financial app.
Problems that traditional banks have to deal with
Slow transition to digital
The transition to digital banking has been very slow at coming from standard banks. Their online presence has mostly been limited to offering the most basic fintech app creation services, such as paying bills, transferring money, making deposits, and applying for credit. Banks can’t fully gain from next-generation IT technologies because of this.
Problems with old equipment
Legacy infrastructure, which includes core banking solutions (CBS) and old data sets, is still used by many banks around the world. There used to be some stability and safety in this infrastructure, but as more flexible and modular options have come up, these old methods are becoming less and less useful. For instance, the one-piece CBS is so deeply rooted in the economy that changing even one part could have a bad effect on the others.
The rise of new banking methods that change things
There are new, disruptive financial models taking the place of every part of the old value chain. This includes payments, stocks, mortgages, and personal loans. Customers no longer have to stand in long lines, do a lot of paperwork, or figure out how to use difficult systems. Customers can easily sign up with a well-known Fintech company instead, and right away they’ll get cutting-edge services that make the customer experience better!
How much it costs to run a physical branch
There are costs that come with having a physical store that are higher than those of a digital bank. These are made up of:
- Costs of land or rent
- Get paid for workers
- Training of workers Management of resources Help for consumers
- Costs for overhead
And this is just the beginning! If brick-and-mortar stores wanted to try out an innovation plan, they would also have to pay for the costs of adopting new technology. To always give customers a better experience, they would also have to keep track of how staff deal with customers.
Badly interacting with customers
One of the biggest effects of the 2008 crisis was that people lost faith in the new financial system. In order to win back the public’s trust, banks began to give a wider range of services.
But in a time when it’s easier than ever to get information, compare prices, and make complaints, banks need to avoid any problems that might come up. They have to quickly address customer worries and help them through a smooth and trouble-free banking process.
The idea of financial technology was created to help established banks deal with these problems. Let’s look at what this popular and in-demand technology can do for businesses and people around the world.
Fintech: What It Is, What Its Pros and Cons Are, and More!
What does Financial Technology mean?
The word “fintech,” which is what most people use, refers to new technologies that aim to improve and automate the delivery of financial services. At its core, fintech app creation services use specialized software and algorithms that can be used on computers and, more and more, smartphones to help people, businesses, and company owners better manage their money and finances. The words “fintech” and “financial technology” are put together.
When it was first used in the 21st century, the word “fintech” was used to refer to the technology used in the back-end processes of well-known banks. However, since then, there has been a shift toward services and definitions that are more focused on the customer. “Fintech” is now used to describe a wide range of fields and companies, such as education, retail banking, raising money for charities, and investment management, to name a few.
Pros of Fintech: In the end, fintech is meant to make your financial life easier and better. It can help you in other ways too. Fintech has many benefits for both users and businesses, some of which are listed below.
Chatbots and fintech have made it possible to pay your bills, set up direct payment, start a bank transfer, and do other things without having to wait on hold for hours.
Accessibility: Fintech opens up new ways for people who live in remote areas or have disabilities to use banking services and make transactions.
Protection: To keep people safe from scams, fintech offers extra safety measures.
Customers can save money with fintech mobile app creation services because they link users’ credit card and bank accounts.
Cons of Fintech:
- There are no physical branches
If there is a problem with the service’s delivery, the fact that everything has to be done through email or social media could be a problem.
A unique selling point of some financial app developers is that they use blockchain technology to make their apps safer. However, not all of them do this, which risks the safety of customer data.
A lot of people think it’s as easy as using their smartphones, but the truth is that this condition automatically leaves out a big chunk of the population that doesn’t have access to the Internet and will have trouble starting a bank account, even with Fintech.
- Not being watched
It is true that this event is so well known that governments in many countries around the world are still researching it and making laws about it. This means that laws around the world regarding fintech are not perfect, and there is a chance that some of these could be theft if there were no laws.
Things Fintechs Should Do:
By using certain tools and processes, fintechs can stay on top of changes to regulations and offer high security:
- A method based on danger
Fintech companies should do risk reviews on a regular basis to stop financial crimes and data breaches. With the help of strong fintech risk and compliance management tools, it makes sense to check the rules often and make any changes that are needed.
- The use of regulatory technology
Because of strict rules, a whole new type of program called “regtech” has come into being. A lot of different options are planned to help financial companies follow the rules and laws. As an example. AML software checks customer information for signs of illegal behavior and makes sure that customers and transactions don’t match any sanctions. Business problems can be solved by automating the creation of feedback reports about questionable transactions.
The use of AI: Using AI-based technology can lead to more accuracy and fewer mistakes when looking for suspicious behavior, negative media screening, or other preventative steps. For example, AI techniques can teach systems to tell the difference between real and fake activities, while AML systems often send out a lot of false alerts.
What does big business do about fintech?
According to the most recent PwC Global Fintech Report, the question of whether fintech will change financial services has been replaced by the question of which companies will do it best and become leaders:
Firms in financial services (FS) and technology, media, and telecommunications (TMT) used to share the same roads, but not always in each other’s lanes. But it’s hard to tell the difference between FS and TMT companies anymore; these two groups that used to be different are now crashing into each other. A lot of TMT companies are asking for FS licenses, and FS groups are now calling themselves technology companies. Fintech is at the heart of this change.
Adopting fintech seems to be the best way for traditional banks to stay in business. According to PwC, as of 2019, 48% of financial services companies have fully integrated new technology into their business plan, and 37% of companies that sell goods and services have done the same.
Fintech will also be important for companies because it will make their services easier to use and faster, and it will let customers personalize and customize them in a way that they are used to.
What’s Next for Fintech
Fintech was already doing well at the start of 2020, but the coronavirus pandemic sped up the process. A few weeks after the shutdown, banks found that digital use had grown by at least 50% while working from home and other restrictions were in place. There’s no way to go back. Customers who don’t want to go to a bank or ATM usually choose to do business with places that accept wireless payments.
Some of the best financial experts think that the epidemic has created a need for fintech in personal banking that wouldn’t have been there for years.
The business world will keep finding solutions to the problems that standard banks cause for many customers. In light of this, what does the future hold for using fintech in regular banking? Here are some important areas that are changing quickly right now:
- An enormous rise in the need for mobile app creation
- Services and goods that are mostly meant to be used on cell phones
- Easy ways to move money from one account to another
- Options for people with bad credit who want to get loans
- Growth in peer-to-peer loans
- Using smart credit cards to pay
- Getting educated to make money
It will get harder to tell the difference between standard banking and fintech. Businesses can better meet customer needs with the help of rapid digitization. Customers want big changes from their bank, but banks that don’t have a good digital strategy are still trying to catch up.
What we did to help Khatabook make their financial app.
We helped make an app and website for one of India’s first digital B2B ledger platforms. The app and website keep a digital record of business transactions, accept online payments, and send reminders to debtors.
By combining finance and technology, we made a strong Fintech solution for Khatabook that is changing the way merchants and users handle their money. We successfully implemented the solution, which led to results for the client in the form of… merchant onboarding and… deals per day. This was done by making the buying process easier for customers and cutting down on merchant accounting time.
It makes us happy to be one of the fastest-growing software development companies. We’ve won a lot of awards for it. Appic Softwares can help you make great mobile or web apps, no matter what kind of Fintech business you have. They are an on-demand app development solution provider and co-developer of a successful fintech app development solution.
Hire fintech app developers to help your business grow quickly right now!
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