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The Impact of Fintech and Technology on Modern Banking


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The traditional style of banking where customers wait at counters is gradually becoming obsolete due to the increasing prevalence of technology in banks. Fintech companies, which are revolutionizing payment methods on their platforms, are causing concern for commercial banks. Not only are they dominating smaller platforms for various commercial transactions, but they are also challenging the established payment methods of larger banks in the industry.

Modern banking has evolved to provide customers with online banking services accessible from their desktop or mobile devices. Internet banking offers a wide range of features such as online fund transfers, deposits, and remittances, making banking more convenient than ever before. However, the expectations of customers have evolved further in recent years. Now, even street vendors like chaiwalas or vegetable sellers can conduct their business effortlessly online, thanks to the emergence of fintech companies.

Existing players in the banking industry face daily challenges from new competitors. Despite this, they are constantly striving to develop niche banking models to attract customers and meet their ever-changing needs.

The convenience of transacting through fintech companies has been a gamechanger. While these smaller players may not pose significant challenges to traditional banks’ core business, they are certainly impacting profitability through their remittance mechanisms and funds transfers to third parties.

While there has been a technological explosion in banking, there are several hurdles to overcome. Some of the major threats posed by technological advancements in modern banking include:

  1. Cybersecurity: With the increasing number of digital transactions, the risk of cyber attacks has multiplied. Cybersecurity is now the top risk facing the global banking industry. Banks are heavily investing in digital banking platforms and educating customers on protecting their account information to prevent falling victim to fraudsters.
  2. Building Trust: Winning and maintaining customer trust is crucial for the growth of any organization, including banks. In the realm of digital banking, banks must ensure a secure and hassle-free platform that can withstand attacks by cyber criminals.
  3. Regulatory Compliance: Tech-driven banks must adhere to the regulations of the countries in which they operate. Going digital does not give them the authority to override statutory norms, as non-compliance can result in penalties. Compliance is essential for their growth and expansion into overseas markets.
  4. Adaptability to Change: Technology-driven banks must be prepared to adapt quickly to changes in the market. While advancements may initially give them an edge, they can quickly be challenged by competitors. The ability to swiftly adapt to change is crucial for withstanding competition.

Although new generation banks face challenges, digital transformation is an ongoing global process and the future of banking. Let us embrace these changes and enjoy the benefits of modern banking at our fingertips.

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