Fintech Stocks – Are Traditional Banks Facing Major Challenges?
Financial technology is simply the new technology and innovation, which aim to replace current traditional financial systems in the provision of financial solutions. It’s an emerging sector which makes use of new technology to enhance various financial activities. These technological advancements are mainly responsible for the development of various financial products like derivatives, mutual funds, asset managers etc.
The popularity of fintech products can be traced back to the 1990s when the internet and electronic networking made the whole concept of online money transfer and financial services considerably simple and easy. And, it didn’t take long for banks and traditional banking institutions to realize that with the help of such technologies they too could make financial services easily accessible to their customers. This ultimately meant a huge consumer base for companies offering online services. Today, financial service companies are employing advanced software applications to help their customers make financial services more convenient. Also, they are investing lots of time and money into research and development activities for making the online transaction and financial services simpler, faster and easier.
The advent of the internet has revolutionized every other sphere of life. So, is there any place where innovation cannot occur? Definitely not. Financial technology has also seen this change with the coming of various online banking solutions by different financial companies and institutions. As far as the internet is concerned, you can find numerous companies who have developed an online financial services platform using the most advanced web technologies. Moreover, the popularity of these online platforms is increasing as banks, other financial institutions, consumer groups and consumers themselves are making the transition from traditional banking system to the online platform.
The growth of fintech and the integration of technology into financial institutions to deliver financial services companies with a competitive advantage and also helps them gain market share. In the world of finance, competition becomes more difficult as only the well-established players can survive. Therefore, many new players enter the market through the back door. If you want to survive in this business, you have to adopt newer technologies and provide solutions to your customers at a better rate. Also, the existing players will have to enhance their service offerings to stay ahead of the competition.
Today, consumers consider credit score very important while taking loan or obtaining financing from banks. Many consumers believe that the credit score has a direct relationship with their credibility. Well, this might be true to some extent but financial services companies still consider a good credit score more important than a good Fintech score. A good Fintech might be very affordable today, but it is impossible to make any financial transaction without using the internet.
This statement has been spoken out by several bankers and financial institutions. But one thing we can say confidently is that internet has completely changed the way people think and it has also impacted the way they behave towards banks. Today, consumers avoid traditional banks like BPI and opt for more reputed Fintech companies, as the business model seems to be working very well for them. Banks must keep pace with changing times by constantly upgrading their service offerings to attract more customers. However, if traditional banks do not provide a good product to their customers, then Fintech stocks are sure to fall down.