Not surprisingly, many people do all or most of their banking online. But many others still prefer to have access to the local bank branch near their home, school, or place of work. In the past, services like mortgages, check cashing and personal loans were only available at a bank branch location and required staff to assist in person. Financial technology (FinTech for short), however, is allowing for new ways to deliver these products to customers, and to do so securely and virtually--often reducing or even eliminating the need for bricks-and-mortar bank locations.
Changes in the banking industry are likely to accelerate in the coming years as more and more large financial institutions take advantage of emerging technologies to enhance the customer’s experience and overall efficiency of their operations. As the cost implementing financial technology strategies decreases, smaller banks and credits unions will also adopt cost-saving FinTech strategies in increasing numbers.
So, what are the underlying drivers of change in the banking industry related to FinTech? Well, technology is allowing financial institutions to:
- Reduce their transaction costs through improved efficiency
- Increase revenue by growing the volume of their business
- Improve the customer experience and better tailor products to customer demands
- Reduce the cost of complying with laws and regulations
- Reduce the potential for fraud and financial loss (although new technologies also come with new risks)
And what does it mean to consumers and business owners? Banking customers will likely see:
- Bank branches and ATMs with advanced technology and features - Smart financial technologies are allowing customers to do more banking on thier own with the help of automation. Smart branches and ATMs utilize FinTech to help customers more efficiently do everything from cashing a check to applying for a business or personal loan--often without any assistance from a branch employee or customer service representative.
- More financial transactions online including loans, deposits and money services - Giving customers more control to transact business whenever and wherever they choose is one of the biggest benefits of the emerging financial technologies.
- New competition from FinTech companies that operate solely online - Expect to see more financial companies offering banking and financial services online only, without any physical branches.
- After many years of industry contraction, new financial companies will enter the market, offering new ideas and more options for consumers and business customers.
- New and innovative financial literacy and financial management tools provided online and for free. These free services help banks fulfill their commitment to promote financial literacy and empower people to take charge of their financial futures.
Finally, what should you do to make sure you have access to the best financial services for you, your family, and your business? Here are a few suggestions:
- Decide what are the right platforms for you--online, in person or both. Then make sure to select a bank or credit union that gives you what you need.
- Reputation means a lot in the banking business. Online or down the street, make sure that you are dealing with a reliable institution.
- It is okay to use more than one financial institution for you or your business. If you cannot find all the services and features you need at one bank, you may need to split your business.
At TheMoneyShelf.com, we know that managing money is both challenging and rewarding. We hope you will check out and benefit from our other articles as well as our selection of some of the best books about money, personal finance, and entrepreneurship.
John Florio, MBA
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