Traditional banking vs fintech: an overview
What are traditional banks?
Traditional banks are government-licensed financial organisations that accept deposits and make loans to people and companies. Other financial services offered by the banks include safe deposit boxes, currency exchange, and so on. The finance industry is quite diversified. In most nations, we have corporate banks, retail banks, investment banks, and a regulated central bank.
What is fintech?
The terms "financial" and "technology" are combined to form the term "fintech." It is a word for innovative technologies that attempt to make financial services and products easier to use. In contrast to traditional banks, which are less flexible owing to their many rules, fintech entered the market and offered exceptional customer-centred user experiences and innovations with their diverse variety of financial services.
Fintech entered the industry and bridged the gap which has existed between banks and clients. Applying for a loan, a mortgage, or conducting transactions has never been easier thanks to fintech. Doing so virtually has allowed clients to have access to banking services 24/7 365 wherever they are. This has been an attractive proposition for a large number of clients, resulting in industry growth. With an annual growth rate of 24.8 %, the fintech industry is expected to reach $309.98 billion by the end of 2022.
What is the future of the financial industry?
Traditional banks have dominated the financial sector for decades, serving as the go-to source for answers to financial difficulties and matters. FinTech has increased significantly in recent years, prompting questions about whether it represents the future or the end of an age for traditional banks.
Traditional banks have begun to include fintech innovations in order to keep up with the rapid developments in the financial industry. Despite the fact that fintech businesses have grown in popularity, there is still a lack of confidence among clients due to the industry's lack of regulation. Because they will be regulated by existing banking standards, a partnership between fintech businesses and traditional banks will give the industry legitimacy and garner client trust. Fintech innovations can help traditional banks deliver a better experience for their consumers. This is a significant step forward and a success for the financial industry.
Traditional banks will always have a significant presence in the financial industry because it is associated with greater trust and stability, and it will not fold its arms and watch as it is trounced. Traditional banks have lately become more customer-centric and have integrated technological tools into the services they provide as a result of global shifts. Customers can, for example, perform Real Time Online transactions on their bank accounts from the comfort of their own homes.
In conclusion, we do not believe there is a future or past between these two, but rather a collaborative and cooperative relationship. Despite the fact that it appears as though fintech is about to take over, research has shown that they are better positioned as sisters in the industry than rivals. They each do their own thing and tackle their own difficulties.
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