Fintech disruption: a lasting driver of growth or just a bubble?

People need banking. Innovation is a necessary driver of growth in any economy and banks may have to face a shift in perspectives due to innovation in the financial industry.

Omni-channel banking is one of these innovations. It has changed the way how  customers interact with banks. Although a multi-channel approach to banking is not new, the omni-channel strategy attempts to connect the dots. It tries to facilitate the customer with a holistic experience by learning about his banking preferences from the various channels he uses to interact with the bank. In the omni-channel approach to banking the customer is the focal point. This approach to banking is based on the assumption that today’s customers need a consistent experience through every channel they use to access the bank’s facilities. Moreover, omni-channel banking also helps banks leverage the data they collect through the multichannel usage from users. It is clear that omni-channel banking is a superior alternative to the conventional multi-channel approach to banking.

Similar to omni-channel banking, there are various other fintech developments that may affect the way modern banking will work in the future. Companies like Square and Paypal have already challenged conventional banking models. Each year hundreds of new startups aim to improve on different aspects of the current banking industry.

Apart from the uncertainty around the survival of current banking practices, innovation in cryptocurrencies and the peer-to-peer lending industry also adds to the already complex landscape. A recent survey at Early investing research showed that most millennials use some kind of online banking for their banking needs. It is also important to note that growth in the fintech industry has been phenomenal and the number of startups within the industry has risen every year since 2010.

And it is relevant to see where these innovations are being nurtured. In the US alone there are more than 8.000 Fintech startups currently active in the industry. The European markets are seeing continued growth in the sector and major investments are being made in the industry.

To help them adjust to the changes in the financial industry, banks have already started investing in major fintech companies. It seems that banks know that they will have to change their business model sooner or later. The point to note here is that fintech innovation may become a part and parcel of the banking industry in the future. It may be that successful fintech companies, merge with conventional banks and provide their services through them. Major innovations in this context will likely be in the online payments, billing, investing and banking services industry.

It may seem as if the traditional banking model could be seeing its downfall. But, it still remains to be seen if the innovations in the sector will be a long lasting driver of growth or just a bubble which will burst due to inferior performance which is lower than the standards set by traditional banking.

Interested in next generation banking? Contact us at Innofis. We can study your case and offer solutions which provide the maximum benefit.

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