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The Role of Fintech Companies in Transforming the Banking Sector

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The Role of Fintech Companies in Transforming the Banking Sector

The last two years have highlighted the importance of digital financial models across the globe. Whether we’re talking about mobile or net banking, digital money transfers, paperless lending or insurance, FinTech has completely transformed the traditional banking system. Banks have traditionally served as a gateway to payment services. With the advent of new Fintech companies such as Paytm, Google Pay, Amazon Pay, and more, making financial transactions has become far more convenient. Digital payment platforms today can be used to pay for travel tickets, bills & dues, recharge mobile phones, or even buy groceries and daily consumables.    

With constant advancements in digital technology, the world of FinTech, too, is progressing by leaps and bounds. Cashless payment systems, machine learning, automation, bank loans, and artificial intelligence have digitally transformed enterprises everywhere. The benefits of these technologies have gone beyond providing basic financial services. Today, they serve an array of purposes across industries.    

FinTech – The Financial Enabler of a Digital Tomorrow   

Digital Banking

Statistics state that, as of 2020, as many as 1.9 billion individuals worldwide actively used online banking services with the number forecast to reach 2.5 billion by 2024. It’s easy to see the extent to which FinTech companies have made banking services simple and convenient.   

Online banking platforms can also help calculate loan EMIs and insurance premiums, and provide financial advice and tips, thus improving financial awareness for consumers. The growth of financial technology has profoundly affected several finance startups and enterprise-level businesses. Let’s examine what factors are enabling FinTech companies to transform the banking sector on a global scale.   

Drastic Improvement of Customer Services – The quality and efficacy of traditional financial institutions has been boosted by FinTech offerings. By delivering improved, contemporary financial services, client retention rates across the industry are set to rise, boosting revenues across the board as a result. The days when customers had to wait in long queues, fill up several documents, and reach customer care for assistance are long gone. FinTech banking solutions enable self-service capabilities and allow customers to handle operational procedures that were only available offline in the past.   

Creation of Mobile Payment Services – While NEFT and RTGS payment methods have been around for decades, the introduction of Immediate Payment Services (IMPS) has made day-to-day banking operations more effortless. Mobile wallets act as a secure platform for facilitating a seamless digital experience between banks and customers. Any money transfer requests sent through mobile wallets are received by banks in real-time, ensuring a faster and more intuitive banking user experience. The flexibility on offer also has given customers a wide array of alternatives to carry out transactions across the globe.   

Cost Reduction – Most business leaders are under the impression that the latest technologies are far too expensive to invest in, which isn’t true. Financial technologies help banks and institutions by contributing to overall cost reduction. FinTech has made it possible to combine physical and digital payments by offering both through a consolidated platform. The biggest aspect that works in favor of enterprises is that convenient transaction options can be facilitated even under the constraints of a restricted budget. FinTech services allow businesses to send and receive money from their accounts seamlessly in different currencies without incurring exorbitant conversion fees. The power of Fintech lies with convenience, not cost.   

Efficiency – The growing acceptance of digital transactions over the world has greatly contributed to the growth of instant payments. There are many cases where traditional methods have been replaced by contemporary, digital procedures. For example, when you apply for a loan online, it needs to be authorized by digital-only lenders who can provide funding on the same day. This is possible only because of FinTech’s innovation and offerings. Traditional banks do not always have the capability to provide rapid and effective financial solutions. Most businesses prefer FinTech because of its efficiency, convenience, and practicality.   

Digital Assistance – We’ve seen several banks launch chatbots that are designed to provide customers with meaningful experiences and address their frequent queries. As technology continues to get more sophisticated, voice bots will replace chatbots in the days to come. Voice bots are targeted to enable superior customer interaction using voice recognition technology that use Artificial Intelligence (AI) and Natural Language Processing (NLP). The kind of voice-based searches that platforms such as Amazon, Google, and Netflix use are set to make their appearance in banking services. Scenarios where you can generate a new passcode, open a new account, or retrieve account balance through direct voice commands are no longer a distant dream.   

Rise of Neo-banking – Neobanking refers to digital banking with no physical branches. Instant loans, mutual funds, savings accounts and fixed deposits are some of the many services offered by neobanks. Phone numbers, emails, or social media identities are typically used by neobanks to support person-to-person payment, mobile deposits, and other financial services. These services are easily accessible online, either through a website or a dedicated mobile application that must be developed in association with other licensed banks. Neobanking bridges the gap between the services offered by traditional banks and the evolving expectations of digital-age customers.  

Digital Banking

Conclusion  

The only way to stay relevant in the business environment today is to be innovative and offer customers an unforgettable experience of quality & convenience. FinTech providers are indispensable players in this game, offering unparalleled financial tools and services that enable enterprises to stay relevant amidst the competition.  

With the ever-increasing reliance on digitalization across sectors, not capitalizing on this trend can create several business challenges, with long term success almost certainly unattainable. FinTech services provide great flexibility to banks and financial service providers to go beyond the scope of traditional methods.  

Banks are finally beginning to prioritize operational efficiency and customer-centric experiences when offering financial solutions. To meet these demands of the banking and financial services industry, Inspirisys is well equipped to offer solutions that are flexible, dynamic, and innovative. Contact us to find out more.