How Fintech Companies Have Affected The Banking Sector
FinTech is coined from the combination of Financial services and information technology. It is simply the use of information technology to create innovative products and services that deal with financial management, such as online banking, big data, mobile payments, among others. FinTech is no more a lingo of the banking industry, rather, it has become a familiar term in technology.
FinTech was initially introduced as a technology that was used at the back-end systems of financial managements and banks. But, the definition has changed and it now includes different applications used by consumers. As at 2019, you could trade online, or pay for goods and service through FinTech.
FinTech for the banking sector has affected various applications and changed the way individuals use and manage their finances. The impact of fintech ranges from online payment apps to investment and insurance companies. Today, customer’s are not so eager to go for financial services provided by commercial banks, as they can easily do that online. Fintech is quite easy and safe to perform financial operations, and this is why Fintech is gaining more popularity and causing disruption in the banking sector.
According to study taken in 2016, a reasonable number of Americans use fintech for their financial operations. However, most of them use online applications for these operations. Presently, there are approximately 1.7 billion people in the world who do not have bank accounts. Fintech has become the savior of these people by providing them with a more easier alternative to manage their finances without a bank account.
Fintech is developed to provide individuals and businesses with a direct access to their finances through simple technology. This has made it the best option to carry out any financial operations online. Let us look at some of the ways Fintech companies has affected the banking sector.
- Biometric sensors
The use of Fintevh has given rise to a lot of innovations and biometric sensors is one of them. Biometric sensors and Iris scanners are two technological innovations that ATMs are using. With them, you do not need to carry your plastic debit cards around for withdrawal. You also do not need passwords to activate them. Aside making withdrawal easy, it also makes it safe, as you will have to be physically present to access your account.
Biometric ATMs uses advanced mobile applications, fingerprint sensors, and face recognition to know the owner of an account. They also have micro-veins that totally removes any errors that can be made while identifying a customer. The use of biometric sensors has become a source of relief for a lot of customers, especially the fear that sets in when you lose your ATM cards.
- Smart Chip Technology
Smart chip ATM cards comes with EMV technology in the chips, and uses a one-time password for each transaction you make. This enhances the security, as no one can use the password even if they steal it. It has helped to reduce the financial losses that can occur in the case of any casualty. This is quite different from the normal magnetic stripe technology that uses just one password every time. This is another invention by technology for the banking sector to minimize frauds and thefts by providing top-notch security to customers’ finances.
- Customer service chatbots
FinTech companies have come up with customer service chatbots that have become familiar these days. Chatbots are pieces of software rbag use natural language processing and machine learning tab allows them to learn from human dealings. They have been built to handle customer interaction like query, and directing customers to platforms to make online payments. With the use of chatbots, it saves customers the stress of having to walk up to banks when they have issues with their accounts.
Chatbots can also perform other tasks like providing investment advice to customers. Some can also scan customer emails and helps to reduce the time used to analyze emailsm. Chatbots can also help customers find anything they need on a company’s website. Chatbots have become an important part of the banking sector, in that it reduces cost and improves customer satisfaction. It also allows customer care agents to focus more on adding value.
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- Online payment
FinTech has created online platforms where financial transactions can be carried out easily. Now, you don’t have to go around with physical cash, or even with your purse before making payments for goods and services. Monetary Control Act (MCA) was initiated in 1980 with the aim of improving a productive payment system, by enabling competition between private sector payment service providers and the Federal Reserve. The Automated Clearing House (ACH) also helped in developing creative ways of using electronic payments.
In 2016, the Federal Reaeve reported that the number of online transactions was more than 3362 million. There was also a rise in the use of credit card payments. This implies that the card details were injured online for transactions. Online payment has become the order of the day, as many people do not even remember the last time they held physical cash, as most of their payments are done online.
- Mobile banking
The increase in the use of mobile phones has compelled many banks to come up with mobile applications that delivers effective FinTech banking services. Most conventional banks today have mobile application that are user-friendly and easy to use. These apps also recognizes fingerprints of the user, and you don’t have to memorize passwords to use them. Mobile banking provides the same or even better experience you have when you appear physically in a bank. You can perform any banking operations you want to on the app, from making payments, to checking account balance, statements, and many more.
- Branch less banking
FinTech services has moved the entire banking system from having various branches to digital channels like online, mobile, and social. It has reduced banks’ dependency on building of branches to perform their operations. A lot of banks are reducing the number of their branches, and moving their financial operations online. In 2016, it was recorded that over 9100 bank branches were shut down in Europe.
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