FinTech means the application of technology to provide financial services and goods to customers. This could include anything to do with money, such as bank accounts, insurance, or investing. Despite the fact that it is a new term, FinTech is not a new concept.
Advancements in technology have always had an impact on the financial industry. The rate of change, however, has accelerated rapidly in recent years as a result of the internet and the widespread use of technologies such as smartphones and tablets.
FinTech for banking has inspired a wide range of applications and altered people’s money management habits. It has had an impact on a wide range of industries, from mobile payment apps to investing and insurance companies. The enormous impact of FinTech can be considered a potential threat to traditional or brick-and-mortar bank accounts.
People like services that are quick and secure. This is why FinTech and FinTech companies are gaining popularity in the banking and financial services industries and wreaking havoc. So, here are a few factors that you can consider before you go ahead and choose between traditional bank accounts or FinTech institutions:
FinTech Came Up with the Smart Chip Technology
ATM cards with smart chips have made a significant contribution to decreasing financial losses due to human error. It comes with EMV technology embedded right into the chip. This system uses a one-time password for each transaction. This improves security because the code is only valid for one transaction, rendering it useless even if it is stolen.
Bankers are constantly looking for new ways to keep their customers safe from theft and fraud by providing top-notch security. Typically, banks use magnetic strip technology as part of these efforts. In contrast to smart chip technology by FinTech, magnetic stripe technology uses the same pin for all transactions, making it more prone to fraud for bank accounts.
Providing Comprehensive & Effective Solutions
Fintech solutions are designed to optimize a customer’s entire journey, resulting in a quicker turnaround time between two processes. These services are also customized to match the needs of the customers.
Businesses today operate in a complicated and diverse environment. As a result, a company needs not just a solid architecture for collecting customer payments but also a system to handle the influx. Fintech is the most effective means of providing comprehensive solutions for use cases like these.
Ease of Using Biometric Verifications
FinTech has brought various innovations to the banking industry, including biometric sensors. Biometric sensors and iris scanners are two excellent technological improvements for securing bank accounts. Furthermore, these advancements are revolutionary since they eliminate the need to carry your credit card. You will also not be required to remember your pin.
These advancements will make ATMs safer than ever before, as you will be able to access your personal account without having to give a password. Biometric ATMs employ integrated mobile applications and use eye recognition and fingerprint sensors to identify the account’s owner. Micro-veins are also used in ATMs to improve identification accuracy and security, which completely eliminates ATM failures in customer recognition.
There’s a Lot of Scope for Personalization
When it comes to boosting user experience, traditional bank accounts are now following in the footsteps of new-age FinTech enterprises. Banks have historically been regulated institutions that provide credit, the lifeblood of economic growth. They also have sovereign insurance for their deposit liabilities, as well as a highly resilient business model that emphasizes trust and security, significant capitalization, and customer apathy.
FinTech, on the other hand, focuses on mobile functionality, big data, accessibility, agility, cloud computing, and ease. Customers’ choices for mobile platforms, telephones, and social media are rapidly evolving, and banks are embracing it.
FinTech Works with AI
Over time, AI has become a crucial component of FinTech banking services. AI and machine learning are critical for fraud detection. The fraud detection software that banks use sends notifications when a suspected fraudulent transaction is discovered. It is then backed up by a human examination, which determines whether or not the attack was real.
This method isn’t foolproof, and it is becoming increasingly difficult to use as attacks become more complicated with each passing day. As a result, much time and money are squandered. Furthermore, there is always the possibility of losing customer information. Banks are looking to artificial intelligence (AI) technology to overcome this challenge and improve the functionality of their bank accounts.
Why Not Choose FinTech over Bank Accounts?
There’s a Technological Risk and Exclusion
If you buy things online, you may be more subject to technology-based dangers. For example, your personal information could be misused, or you could be a victim of cybercrime.
Moreover, while technology increases consumer choice and access, it also has the potential to exclude those who do not understand how to use the internet or electronic devices such as computers, cellphones, and tablets.
FinTech Lacks Exclusive Rights and One-on-One Meetings
Fintech companies are relatively new to the financial services industry and operate on a different business model than traditional banks. It could be more difficult to figure out which areas are controlled and what your rights are if something goes wrong as a result.
Moreover, if you buy everything online without ever meeting someone in person, you may be more likely to make rash, uninformed purchases. This is particularly essential for larger purchases.
Conclusion
Both FinTech firms and traditional banks have their pros and cons.
FinTech has been widely adopted by banks and financial institutions due to client demand for a safer and more user-friendly banking experience. Banks have fundamentally transformed how they work as a result of new generation technology such as analytics, AI, and machine learning. In terms of technology, FinTech firms are definitely giving stiff competition to traditional bank accounts.
Financial tech companies’ innovative ideas and cost-cutting technology are projected to disrupt the traditional banking environment and business. Banks must understand this FinTech boom and adjust their business models to the changing banking and financial environment.
