Fintech helps expedite the banking processes, makes transactions more secure, provides better customer service, and enhances the banking experience.
Banking is an integral part of our society, and almost every person in this world has a connection with the bank.
In recent pandemic times, banking has been a little difficult because of the quarantine and strict policies. In these harsh times, Fintech came and eliminated the rising banking issues.
It has helped banking by digitizing all the procedures, and now; it has become more popular than traditional banking.
About Fintech
Fintech is a catchy name that comes from the term “Financial Technology”. So to generalize, Fintech means all the technology used to improve, modify, or disburse any financial activity.
Fintech uses different types of software and programming tools to digitize every financial activity. The platforms for these digitized financial activities are your mobile phones or computers. A more improved platform is the virtual reality (VR) trading platform.
Banks are now using Fintech also for their financial activities. They use Fintech for back-end processes such as monitoring of account activity. Another use of Fintech is in consumer-facing solutions, for example, the app used for checking your bank balance.
According to Ernst and Young’s 2019 Global Fintech Adoption Index, Fintech adoption has increased from 16% in 2015, to 64% in 2019.
It was stated in the report that almost three out of four consumers use Fintech for money transfer and online payment. Popular and trustworthy companies like FinXP have used fintech to make our life much easier when it comes to banking and payment transactions.
The Evolution Of Fintech
Although Fintech is getting common in the present days, the actual concept of “Financial Technology” dates way back to the 19th century. At that time the technology used for ATMs and for verifying signatures were all part of fintech.
Although back then, Fintech was used just to aid the anthropogenic bank activities. Most of the activities depended on human skills rather than advanced technology. However, in recent years, it has become a staple in every bank and business institute.
Therefore, many organizations and institutes are now interested in having Fintech. The investment banking company JP Morgan has invested $25 million for their Fintech startup in 2019.
Another bank, Capital One established a banking café infused with Fintech.
The biggest leap of Fintech however was at the start of the coronavirus pandemic. Because of the pandemic, people could hardly go out due to quarantine, and this disrupted banking work. To continue the financial activities, the banks needed an alternative method, and Fintech was adopted for efficient financial transactions.
How Fintech Affects Banking
Fintech has affected banking activities and the impact is quite big. Let us look at how banking has developed because of Fintech:
1. Faster Financial Procedures
Banks can now expedite the process in a shorter time. Before banking processes like a credit score report or an international money transfer took weeks or even months.
But with the arrival of Fintech, the time to conduct this work has been reduced to mere minutes.
2. Improves Financial Inclusion
Fintech can also help improve financial inclusion. In some parts of the world, there is no proper banking service. These regions also do not have sufficient help from the government. So they can not get involved in global financial activities.
But this is gradually changing. With the help of Fintech, all these regions can now participate in global finance.
3. Chatbots Support
Previously in traditional banking methods, if you needed to get any information, then you had to wait some time for someone who can explain the matters to you. For any activity, you also needed to speak with some banking officials.
However, with Fintech, that is not necessary anymore. Fintech has applied chatbots to different banking services. Chatbots are a form of artificial intelligence that conducts conversations with the client. They are extremely efficient, as they can answer most queries almost instantly.
4. Better Customer Service
Fintech has also enabled better customer service. With the help of improved AI, better biometric sensors, and smart chip technology, it is possible to detect any type of fraud in banking and keep financial activities safe and secure.
In the past few years, a number of banks have been victims of hacking and financial activities have been hampered because of frauds. Banks have lost huge money to these hackers and frauds.
However, with the proper application of Fintech, it is possible to stop these hackers and keep all banking activities safe and secure.
5. Allows Branchless Banking
In traditional banking, there were numerous branches of a bank, and they were scattered. So if you were unlucky and did not have a bank near you then you had to travel quite a distance to go to the nearest bank.
But Fintech solves this problem too by making concrete bank branches unnecessary for banking.
With the help of Fintech, you can now conduct your banking activities, pay your bills through online digital platforms with your mobile on the go. That is why many banks are now reducing their number of branches and shifting their financial activities online.
The Safety Measures Of Fintech
Although Fintech has existed for more than a few decades, it only became a buzzword recently and this made some people think Fintech is not safe and there is a possibility of a data leak. However, that is not true.
Fintech shifts all the human conducted activities through zeros and ones. This means there is no human involvement in any banking activities. There is very little scope for frauds.
An important factor for everyone to know is that technologies do nothing outside their program. As there is no program for leaking information, Fintech will keep all the information tight and secured.
Final Thoughts
With so many banks and institutes now shifting towards Fintech than their traditional human involved activities, it becomes clear that Fintech has a bright future ahead. The safety it provides is also a big factor of this being so popular.
89 percent of SME adopters feel secure to share their data through Fintech. We hope that the information provided in this article has helped you to understand the value and influence of Fintech in the Banking Sector.
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