How FinTech is Changing Modern Banking

Banking used to be a lot more complicated. Even looking back to ten years ago, it was mostly either offline, in person, or on paper, with online banking being limited. Since 1981 you could access your accounts by phone, and since 1994, online, but this was so limited that it was easier to leave the house and go to the bank. Now, FinTech has totally changed how banking works and continues to do so. Comparing phones in 1981 to the computers we have in our pockets may feel superfluous. Still, the ways FinTech is developing the culture of buying, selling, and lending is very, very different to phoning up and asking to hear how much you have. Innovation has driven the banks into a FinTech mindset, rather than one of spreadsheets, pens, and paper. Now, no matter who you bank with, it’s likely you’ll be able to see your bank details on your phone after a quick passcode, face-scan, or fingerprint. How will these developments continue to change modern banking? Even the most well-established banks may fall prey to the ease of banking newer FinTech companies, such as Revolut and PayPal, provide.  

FinTech, Customer Retention, and Online Culture

Buying, spending, splitting bills, and sharing money has never been easier. Thanks to developments in Near-Field Communication (NFC), owning a debit card isn’t necessary for a trip to the shops. This kind of ease of use is what consumers are looking for. FinTech apps almost completely remove the red-tape involved in opening a bank account. Now it’s easier to switch your current account than ever. A shift in mindset has happened. Instead of just retention, now acquisition is a lot more common. Now in 2020, it’s much more likely people will cycle through current accounts at different banks to reap every switch reward possible. FinTech innovation and start-ups have helped create and manage this mindset. Instead of entirely focusing on retention, rewards for shifting have become a lot more enticing, and it has become a lot easier to move a current account. FinTech startups used a business model to entice customers and use their money as an investment for scalability. Now that these businesses have scaled they’re directly competing against more well established banks, largely because there wasn’t any bureaucracy stopping them from moving to an online platform. It’s clear from blockbuster, self-checkout machines, and online banking that modern consumers want to be able to do as much as possible online, without getting slowed down by the possibility of human error. This means the FinTech startups could benefit and reap the rewards from being allowed to start with an online platform, entice customers with older banking processes, and retain them longer by challenging the rewards modern banks are offering. The change here is that rewards to switch are getting more aggressive, and the ability to switch has come full circle, and has simplified further.  

Exchange Rates and Costs

FinTech startups, such as Revolut, also apply to a modern market much more than old-fashioned banking practices. Revolut removes fees for spending online, something you can expect to see in major banks at some point in the future. This is another benefit FinTech startups have had over major banks. As they’ve been able to build from the ground up, they’ve been able to fit around a modern customer a lot more.  Whether it’s a simple feature to help you “split the bill” with PayPal, or if it’s reducing exchange rate fees, these features apply much more to modern consumers. Moving forward, this may not even only apply to travel. It’s not uncommon for someone to be paid in dollars but work half the world away. PayPal is one of the preferred methods of payment in a gig economy, and so, while there’s no exchange rate for paying for an Uber or instantly purchasing a train ticket, there is if you design logos. Exchange rate fees don’t make as much sense as they used to in terms of the modern consumer.  

Talent and Innovation

At this point, it’s clear why FinTech startups have both changed and challenged modern banking. Their ability to innovate beyond the bureaucracy and red-tape of conventional banking has, in turn, forced conventional banking to change and innovate beyond their own bureaucracy. This innovation was driven by people, and not just banking experts. Innovations from FinTech have come from an ability to assess gaps in the market, think outside the box, and take risks that used to be impractical. Now, thanks to the talent that drove this innovation, we can pay for our shopping with our phones, split a bill, or step into an Uber without much additional hassle. It always has been the people behind the companies and their ideas that are changing modern banking. So, if you’re looking for talent to develop, change, and improve the face of FinTech or PropTech, contact us today.