Emerging technologies have made considerable progress in introducing newer innovations in the banking industry. For example, the internet has drastically changed the banking industry, leading to streamlined user interactions. At the same time, the development of online businesses was laying the groundwork for non-banking online-payment solutions. Fintech companies in India have seized the opportunity and created a roadblock for the oligopoly of these legacy financial institutions.
With all the disruptions that Fintech’s causing in the banking industry, now might be a suitable time to discuss the key differences between them.
Difference Between Fintech & Traditional Banking
Fintech is innovative, customer-centric, and simplifies complex financial processes, making them more accessible to the public. These organizations employ lean operating models that are free of legacy system issues and can avoid unfavorable regulations.
Legacy systems and the regulatory framework hamper banks’ ability to capitalize on modern technologies promptly. As a result, banks cannot launch new services that address customer needs at the same rate as fintech firms.
Fintech’s are quick and easy to use. They operate virtually, so consumers are not required to be present to transact financial services. This makes fintech a more appealing option. They provide 24-hour access and improved customer communication in general. They have grown due to their emphasis on user experience, an area where banks have fallen short.
Many banks require the customer to be physically present to open an account. Not all banks have the necessary technology to validate identity online. As a result, traditional banking becomes less convenient for consumers, resulting in an unpleasant experience.
To run more efficiently, fintech companies in India rely on technologies such as machine learning, artificial intelligence, and automation. Technology also results in fewer errors, higher quality service, and faster service.
Banks are still grappling with legacy infrastructure when it comes to technology. These banking systems are often decades old and are outdated in their core functions. Legacy systems limit banks’ ability to interface with other systems and prevent them from upgrading their infrastructure to deliver new services to customers quickly. Banks are lagging as a result.
Will Fintech and Traditional Banking Coexist?
Fintech firms and traditional banks both serve as financial intermediaries. Banks have been in operation for hundreds of years, but they must make radical changes to meet their customers’ needs.
Fintech’s, in terms of the financial technology company, offers users more advanced features and all the same services that traditional banks do. Fintech’s’ innovation and agility benefit traditional banks. Furthermore, decades of customer loyalty, company size, and an established network increase trust in fintech.
Banks are implementing fintech features to improve the user experience to meet today’s consumers’ technological demands. Allocating resources for digital agility is becoming a priority for banks as the entire financial system evolves. Long-term partnerships that combine innovation (fintech) and trust (banks) in building the digital future sector are a win-win situation for both.