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Financial digital software and platforms (fintech) are rapidly changing how consumers bank and manage their finances. Advancements in fintech are empowering customers in how they borrow, save, invest and conduct day-to-day banking. Here are some of the ways in which fintech is changing the future of customer banking.
Improved fintech lending and self-directed investing platforms are making it easier and more cost-effective to connect customers looking to lend or save money directly with financial institutions by cutting out the need for brokers or middle men. These new peer-to-peer (P2P) lending practices and automated algorithms help reduce overhead, allowing the savings to be shared by financial institutions and customers through reductions in the cost of borrowing and investment fees. When investing, customers have access to new risk-assessment tools and apps to help them select and securely monitor investments on the go from their mobile devices. As cryptocurrencies and blockchain technology grows and the popularity of crowdfunding increases, customers will have more choices in terms of lending and investment.
Fintech is also streamlining the way customers make payments to other parties including businesses, family and friends by email. Using the e-transfer option, customers can login to the bank and set up new individual payees or business customers using their email accounts, then transfer funds within minutes. These enhancements to the way payments are transferred provide customers with a way to track their pending and accepted transfer history at any time.
In addition to the ability to pay vendor invoices using e-transfers, customers can also quickly set up ad-hoc or recurring payments to any vendor online. Payments made to vendors are posted within a short time-frame (usually a few business days), and payment history is readily available online as well. Outside of traditional banks, other secure credit card processing and bank interfaced platform vendors solutions like Paypal, Stripe and Square also make it possible through their fintech platforms for customers to more securely make online purchases.
In an article on 2018 fintech trends, James Paine discusses how near-field communication has drastically changed the process in which people make payments. Near-field communications (NFC) has made it possible for consumers to make “contactless payments” by merely holding their bank cards up to a card reader to make a purchase. Some people have even volunteered to have an implant inserted in their hand, allowing them to make purchases by holding their hand in front of a reader. Many devices such as our phones already contain this technology; however, we are a long way from implants becoming mainstream.
Customers can now communicate more securely with the bank through an on-line banking portal using their bank card to log in. Email messages can be sent between the customer and their bank in a matter of minutes, and some banks also offer the option of encrypted email communications using a fully secured password protected email thread initiated by the bank.
With growth comes regulation. The fintech industry has grown faster than regulators could have imagined. This has created an increased need for regulations, to monitor and manage the security of fintech software and hardware. Financial institutions are prime targets for cyber attacks, which can, in turn, shake consumers confidence in their ability to protect their financial assets. Increased regulations of fintech software and hardware can help financial institutions strengthen their security and improve consumer trust.
Fintech advancements are changing the face of the financial industry, making lending and investment practices more cost-effective, expediting peer-to-peer transfers and streamlining payments to vendors. By offering customers with these fintech improvements, financial institutions are able to elevate their levels of customer service and satisfaction.