FinTech, or financial technology, is exactly what it sounds like - technologies built for use in the financial industry. FinTech startups are companies that develop customer-centric digital financial solutions that have changed consumer expectations in the banking industry forever. Through FinTech, banking has been made faster, simpler, and more secure than ever before.
What There Is To Know About FinTech & Banking
Long before the concept of FinTech, financial institutions and banks have offered customers basic banking services like bank accounts, loans, or credit cards. Over time, customers have expressed the need for more complex banking services, including payment processing options, fraud/risk management, or even personal financial guidance and assistance.
While banks seek to have a single banking platform for their customers to use to access a variety of services, FinTech startups often develop targeted financial solutions designed to meet specific pain points of customers. When you Google “FinTech” you’ll find no shortage of companies and their products or services meant to improve the digital banking experience.
Thanks to Open Banking APIs, banks can work with FinTech firms to develop cutting-edge banking solutions that do just that - make the digital banking experience as simple and intuitive for the customer as possible. FinTech firms are giving power back to consumers over their finances, and banks are more than happy to partner with them so they can share the technology with their typically larger market share of customers.
What's the Difference Between FinTech and Banks?
If banks are the financial institutions that provide customers with the products and services they need to conduct their finances, then what is FinTech? FinTech is the development of financial technology that seeks to improve the customer banking experience with digital solutions.
What Are Some Examples of FinTech?
1. Bank of America’s Erica
Bank of America’s Erica is a virtual financial assistant that helps customers manage their personal finances. Leveraging artificial intelligence and machine learning technology, assistants like Erica let every customer receive personalized guidance about their finances without the need to ever visit a physical bank branch.
Social payment apps like Venmo allow consumers to easily send and receive money from one another via ACH payments on the ACH Network. The development of this FinTech technology has revolutionized how consumers send money to each other instead of needing to have cash on hand at all times.
FinTech firms don’t just seek to make payments easier for customers - but investing too. Robinhood enables customers to manage their investments for free online or mobile app so they can be in control of their financial futures.
FinTech has also streamlined the loan procurement process thanks to startups like Opploans that make it easy to apply for personal loans. With a simple application process and quick loan issues for lower interest rates, customers don’t have to worry about a long and grueling process or waiting period to get the money they need.
How is FinTech Disrupting Banking?
So, how is FinTech really affecting banks? For starters, banks are being pushed to adopt a more customer-centric banking experience, as well as improve the technologies they’re using to deliver their services.
Digital financial solutions developed by FinTech firms must exceed customer needs better than traditional banks, or risk having customers look elsewhere for the quality of service they seek.
This increased competition within the financial sector for a better customer experience is not a negative. Thanks to FinTechs developing better and better technologies that are easier for customers to utilize, and banks looking to implement such technologies into their service offerings, the financial services industry has drastically stepped up its game in driving innovation within the industry itself.
Everyone has something to benefit from FinTech solutions for customers. Banks get to use the new tech to deliver innovative services and grow their market share. FinTechs get access to existing banks’ financial data on a more secure open banking network to refine their technologies. Importantly, customers receive seamless digital banking experiences with greater confidence in data privacy and the flexibility to bank digitally instead of visiting brick and mortar branch locations.
How FinTech Will Change Banking For Good
Banking from just 10 years ago has changed dramatically thanks to FinTech. It has helped accelerate the digital banking transformation and provide customers more personalized banking experiences. Customer expectations to manage every aspect of their fiances via an online or mobile platform have only increased, and banks have had to respond with innovative solutions that will continue to get better with time. Artificial intelligence and machine learning are key elements of most FinTech solutions’ ability to deliver customers real-time and personalized experiences, and those processes are only more and more refined each time they’re completed, ensuring customers are only receiving the latest and greatest experience available to them.
Envestnet | Yodlee - Leaders in FinTech
Leveraging the most comprehensive, accurate data, and intelligent APIs, Envestnet | Yodlee enables hyper-personalized FinTech experiences for consumers and businesses who need them. From improving the payments process, giving consumers and businesses peace of mind through instant bank account verification, or personal financial wellness solutions, there are an abundance of Envestnet | Yodlee digital financial solutions available to choose from as we continue to the path toward innovative digital banking services and help our customers move beyond more traditional experiences into the future.