Mobile devices are forever changing the financial services industry – otherwise known as FinTech. Customers are choosing the convenience of waving around their smartphone at point of sale over, even, internet banking. FinTech is creating more ways for consumers to spend and manage their money, from PayPal to Apple Pay, digital banking is taking over the financial world. According to Apple Pay, they have a growth of one million new users a week.
These changes have been rapid. It was not long ago customers stood in long lines at banks to sort out their finances and, then you had to provide all sorts of ‘Know Your Customer’ (“KYC”) / proof of your own identity. Those days are gone.
FinTech has a huge impact on all parts of society, especially empowering consumers to take control of their finances. Here are some trends currently impacting the industry.
Blockchain technology eliminates physical currencies
Blockchain technology eliminates the middleman previously required to complete or manage transactions. Digital currencies like Bitcoin use blockchain technology which transcends all government backed currencies and eliminates the need to change currency when, for example, travelling.
But it is much more than a digital currency. You can use it to trade anything in a safe environment. This can include royalty fees, ideas, money, and copyrights as well as investments and real estate. Using blockchain technology means you can do everything from the comfort of your own home or on the go from wherever you are. There is no real need to carry cash if you carry a smartphone.
The fact Bitcoin still exists demonstrates alternative currencies can survive without government backing. FinTech continues to transform the financial services market.
Banks are on the way out
Reports show digital transformation has been so effective that 40 percent of Americans have not visited their financial institution in 6 months or more. These days it is even difficult to find a branch, with banks closing more than 50 percent of branches between 1995 and 2015. While this is mostly due to a shift to online and digital banking, digital transformation has brought new players into the market. Banks no longer have a stranglehold on the financial management market as there are lots of firms that can help consumers invest, save and lend faster, easier and cheaper than banks.
FinTech empowers users not financial institutions
FinTech offers consumers a whole set of new rules and experiences in the financial industry market. It makes banking, and all things financial, convenient from a handheld digital device. FinTech firms do not have to follow the same federal legislation as traditional banking organisations. Without the restraints, it gives them the freedom to create better customer experiences.
These days you can deposit a cheque using your smartphone, refinance and apply for a loan. FinTech firms offer opportunities for consumers to take control and make conscious decisions about their finances.
Security measures will improve for mobile devices as consumers use them for financial transactions. With the high rate of hackers trying to hack into personal and corporate systems, biometric security will be the new way to prevent fraud. This involves eye and face scanning as well as fingerprint recognition for access into financial accounts. Government agencies already use this type of technology, and it will soon be the way to identify yourself when making digital payments.
Wallets will disappear
As consumers change the way they pay for purchases, smartphones will replace wallets. According to Global Banking and Finance, contactless transactions are set to double across the world by 2021 which will mean purchasing goods and services using a smartphone will become easier than ever with one click from a handheld device. This will soon to replace visiting your bank online, or in person, as the new normal. Never again forget or misplace your wallet. Just remember to take your phone everywhere you go.
Embracing technology and digitally transforming is a must if your business is going to survive. But, technology is only as powerful as the people behind it.
Talk to NashTech specialists to find out how to stay ahead of competitors in the ever changing digital environment.