words Al Woods
The introduction of FinTech into the financial services industry is certainly no longer a secret, and the traditional banking institutions are among the many bodies to understand this.
In a digitalised age where so many previous manual jobs are now carried out via technological devices and software, it was inevitable that such innovative technology would make its way into financial industries.
Some financial technology companies are very much working with the system, providing new services to old businesses. However, these companies also pose a huge threat to banks, and are disrupting their connections with current and potential customers, forcing them to invest in FinTech in order to keep these relationships with clients. But, why are they doing so?
Disruptors Are Offering More Options
Considering that millennials are expected to make up 75% of our workforces by 2025, technology should be a huge priority on the minds of banks now that FinTech is taking the industry by storm. The younger generation worship all types of technology. This certainly doesn’t ignore the likes of FinTech. With the ability to carry out transactions with the tap of your phone, or to receive a loan within minutes for your mortgage needs, the services offered by FinTech are proving much more beneficial for those trying to manage their finances easily and quickly. Therefore, banks are needing to invest in this technology in order to push FinTech start-ups out of the equation. Otherwise banks are going to appear too old-fashioned and quite frankly, pointless for these people who live and breathe technological innovation.
Banks Consider FinTech as B2C
There is no denying that the use of our mobile phone has greatly improved our relationships and interactions with our favourite brands, simply because we are able to interact better with our financial products and feel more in control of our actions. For banking institutions, usually the main focal point of their profits are by making contact with business-to-business (B2B), organisations. However investing in FinTech will allow them to operate on a business-to-customer (B2C) level as well. Consumers have been favouring the likes of FinTech start-ups because of the wide variety of services that they offer the people. This allows us to tailor the way that we manage our finances based on our primary requirements. This makes the financial services offered appear as more personalised. Ultimately this will make the customer happier as they feel like more than just a number on a spreadsheet. This has been worrying numerous banks across the globe, and thus investing in FinTech is the only way for them to connect with customers on a personal level now that FinTech disruptors are hot on their heels.
FinTech Is Receiving Huge Investments
It’s crystal clear to see how impressed individuals are with FinTech and how it in revolutionising the way that financial services organisations operate, particularly with the likes of wealthy billionaires investing in the movement. Mohammed Alabbar, a billionaire investor, has taken note of FinTech start-ups, so much so that $250 million has already been used for investing in FinTech companies, allowing them to exceed their traditional banking competitors and get rid of them for good. Naturally, this would be a disaster for banks, and thus investing in FinTech is the only way that they’ll be able to keep their bricks standing strong.
In order to offset the disruptors on the horizon, top bank Citigroup has decided in invest in FinTech to keep the start-ups at bay and dominate the financial technology sector. With an approximate figure of 200 million customer accounts on the database, Citi has a huge potential to grow and expand with the help of FinTech. Managers and executives of banks such as Citi have outlined the benefits of pairing up with FinTech, as B2B and B2c qualities can be merged together to form a seamless, tailored service to every possible customer.
Unless banks and financial companies identify the advantages of FinTech and incorporating it into their services, it’s unlikely that they’ll be around in the financial services industry for much longer. With such a mammoth potential associated with FinTech, it would be foolish for banks to ignore the trend and stubbornly turn their backs on these disruptors.