What is FinTech and How it Has Impacted the Banking Industry
Most people are already using FinTech (which is short for ‘financial technology’) but are unaware that they are. They may have snapped a photo of their paycheck using their smartphone and uploaded it to their bank’s mobile app. They may have even used the same application to send money to a loved one or pay bills, or relied on a mobile wallet to pay for food. Financial technology is likely a critical aspect of everyone’s professional and personal daily lives nowadays!
Understanding financial technology
FinTech pertains to software, applications, and algorithms for both mobile and computer-based tools. It may also encompass hardware, such as virtual reality trading platforms and smart, connected saving tools (i.e., connected piggy banks). Financial technology platforms are capable of performing basic and frequently used banking actions, such as moving or transferring money among accounts, depositing checks, applying for financial aid, and paying bills. Higher-end platforms are capable of performing technically intricate tasks, like cryptocurrency exchanges or peer-to-peer lending.
According to the 2019 Global FinTech Adoption Index by Ernst and Young, the adoption rate for financial technology is beyond two-thirds or 64% globally, which is a significant increase from 16% in 2015. The report stated that three out of four consumers used payment solutions and money transfer in 2019. With this data in mind, there is a huge potential for financial technology to impact the banking industry now and in the long run!
Benefits to banks
Banks rely on FinTech for consumer-facing tasks (i.e., apps customers use to check their balance) and back-end processes (i.e., behind-the-scenes account activity monitoring). Individuals rely on it for a range of purposes like investing and calculating taxes.
Because of the COVID-19 pandemic, more businesses are relying on FinTech to enable tech-powered transactions and contactless payments. Financial technology is also transforming the banking industry by bringing branch-specific processes to different digital channels, like mobile, online, and social. Moreover, it minimises dependency on brick-and-mortar branches to continue operating, thus, allowing customers to do their banking anytime and anywhere, even after office hours or on weekends and holidays.
FinTech has also resulted in chatbots powered by machine learning and with natural language processing prowess to learn from interacting with humans. Efficient chatbots streamline customer interactions, such as directing customers to specific departments, query handling, and answering questions through chat.
About the Author:
Ducont Systems FZ LLC is a global technology integrator and IT solutions provider that simplifies digital transformation and induces digital capabilities. We have diversified clientele in various industries including Banking, Insurance, Telecom, E-Governance, Consumer Electronics, Manufacturing, and Utilities & Logistics. We have expertise in Mobile banking solutions, Field service management solutions, Enterprise mobility solutions, and Microsoft and IBM solutions.