The Banking Sector Has to Innovate or Face Stiff Competition

In a banking conferences held earlier this year, banking professionals gathered to talk about the latest trends. The main topics included tech, digital, Fintech, and space and remarkably the emergence of the use of Blockchain, RegTech and the future of digital banking and finance, with leading investment experts from all over the globe offering their insights regarding the matter.

It became significantly clear that the new FinTech boom is destroying the traditional retail banking. From such information technologies and inventions like Bitcoin and Blockchain to Crowdfunding and Peer-to-Peer lending, the notable rise in financial-based inventions and technologies cannot be ignored. Some experts and commentators have referred to this increase in technology use in the banking sector as the Fin Tech boom, and they have indicated that it is taking over the whole industry and the industry needs to change, or it will die.

Fintechs are organizations or companies that occur at the intersection between financial service and technology providers and are disrupting the banking sector significantly. They appeared a decade ago and started dealing with several of the financial services that had traditionally been offered by banks. They promoted and marketed themselves to various customers often using slick technology as their key attraction. Nevertheless, despite their innovativeness, their threats were not as significant that time.

However, as they increased and grew in numbers, the cherry picking of the banking sector became more notable and aggressive, and the bankers noticed the new trend. Now, many banks are responding to the threat of these new companies by copying their patterns and ways and becoming disruptors themselves. Banks have chosen to develop new capabilities in-house, for example, data- driven analytics to improve their chances in the highly competitive market. In several cases, they are even partnering with Fintechs for increased competitive edge and better chances of survival.

Other than the use of data to improve customer experience, banks have also been using Blockchain as a competitive reaction to the threat of Fintechs with many banks today exploring the use of various technologies to process customer payments. The Blockchain is offering such banks incredible advantages because it is not only transparent; it is also time and cost effective. Furthermore, the decentralized way of documenting transactions also gives banks, and their customers improved security because of any suspicious or criminal activity changes to the whole layout of the digital system. Blockchain underpins Bitcoin, which has been synonymously used with the digital currency.

What has become apparent from this disruption is that the changes the Fintechs have brought to the industry will be positive. Experts have called for banks to become innovative even at their most basic levels because such issues as data security will become even more critical. Furthermore, moving finance into the digital space will decrease costs of operation, decrease margins for errors and deliver improved and excellent efficiency.