How is Fintech Changing the Banking Sector?
Though the term fintech has been around since 2011, it gained its popularity with the emergence of the startups in the recent years. Further, through November 2016 demonetization, fintechs gained wider exposure. The advent of fintech has eased the banking process; earlier, for every single bank procedure, the account holder has to visit the bank. But, the current technology advancement has led to a drastic change in the traditional banking process, as the customers can complete the bank transactions right from the comfort of their homes.
The fintech products are being developed in a way to suit the modern tech-savvy customers like replacing manual user authentication with the identity management system, transforming cheque payments into NEFT and UPI payments. Apart from these, there are several other benefits that fintech has brought into banking sector that includes revolutionizing customer's daily payments, quick and secure transfers, minimal complexity and suspicion in insurance procedures, and not to forget, the new banking models such as cloud banking and neobanks.
With private venture capital growing into prominence, the share of fintech dollars investment has risen from five percent to about 20 percent, a range equal to the share of Gross Domestic Product assigned to the finance industry. This has, in turn, elevated the fintech in the innovation economy.
Banking and Fintech fusion
The fintech companies and banks share a collaborative nature rather than a competitive one. Fintech companies' adopting latest technology helps them to provide economical services to their customers, which makes banking services more efficient. The banks are following the footsteps of the fintech companies to provide a smoother operation to their customers and business lending, such as using UPI for efficient banking features, simpler merchant payments, easy fund routing, wealth management, and remittance are offered. The intervention of technology has paved the way for the association of several financial services for instant delivery of products or services through an open architecture framework.
Inculcating Blockchain in Fintech
PwC's survey on fintech and financial services reveals that about 77 percent of the financial services industry is looking forward to adopt blockchain technology by 2020. Inculcating blockchain technology in the fintech sector is expected to bring in flawless and more competent customer experience. This technology inculcation would cut down the cost of the traditional banking sector; about $15-20 million is expected to be saved by 2022. Further, blockchain would also assist in monitoring unconditional bureaucracies in the regular banking sector. It also helps in restricting data breaches and other fraud activities, which are crucial in the banking sectors; this enhanced security enables the fintechs to share unaltered data via a decentralized network. Thus, Blockchain has a considerable tangible effect on the financial services industry.
Fintech has tranformed the traditional financial services and amplified the opportunity for newcomers and startups in the market. Besides, latest technology such as blockchain and AI are being adopted by the banking industry to boost the online banking process further as the next generation customers choose to handle their finances online through phones and other tech products.
As the fintech immerses in the banking sector, we could expect much more advancement in the forthcoming days. Though the fintech startups have not gained much profit and are striving to sustain in the market, its progress would surely make its mark in the industry, which would add to the growth of the banking sector.