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According to stats, it is anticipated that by 2022, the global financial sector is going to be worth US$26.5 trillion with a CAGR of 6%.
Considering the potential and limitless opportunities fintech offers, one can’t help but wonder the “what’s the impact of fintech on banks?” Surely, this technology has to have some effect on the banking sector in one way or another.
Today, we will be talking all about how fintech is shaping the future of banking and the importance and impact of fintech in accounting and finance. Read down below to find out more about effects of fintech on banking industry.
Effects of fintech on banking industry
Fintech can be regarded as the biggest challenge that banks have had to face to date. However, this does not mean that the future for traditional banking is bleak.
Digital disruption in banking
Digital disruption in banking can allow traditional banks to cope with the rising competition, or better yet; partner with fintech to disrupt the whole banking industry. In 2019, nearly 70% senior banking executives expressed that it’s a good opportunity for banks to collaborate with fintechs and Big Techs to create new services.
According to Citibank, due to the rise in fintech, we can expect a 30% decrease in the banking sector job market. This is because fintech software development services are allowing companies, businesses, and individuals to overhaul their operations and opt for automated and improved fintech services.
To keep up with the growing competition, a lot of banking systems have also started adopting newer technologies. These include blockchain, artificial intelligence, quantum computing, and more.
Moreover, banks are also gradually getting comfortable with the idea of investing in, and collaborating with fintech companies.
For now, it wouldn’t be correct to assume that fintech will completely replace banks in the future. However, there’s no denying the fact that effects of fintech on banking industry have been huge.
The FinTech Revolution
Financial technology has allowed people to do much more than just make transactions and check bank balances. Considering the speed at which the fintech industry is evolving, it wouldn’t be incorrect to say that we are in the midst of what most financial experts would consider a ‘paradigm shift’.
Ease of conducting digital transactions
Fintech is changing the whole landscape of the finance industry rapidly. In the coming years people will be managing finances digitally only, leading to a more connected, streamlined and open form of banking.
Though fintech solutions offers a lot of benefits, one of the biggest advantages is that it allows people to make transactions from almost anywhere.
This has eliminated the need for people to visit banks frequently since it’s possible to send and receive money only with a few clicks on the phone. Also, people no longer need to carry cash, debit, and credit cards with themselves at all times.
Mobile apps for handling finances
Fintech has also started making use of mobile apps to make the transaction process easier and accessible through apps such as Besure. ConsumerAffairs revealed that eight out of ten Americans are more likely to make digital transactions rather than going to a bank for it.
Fintech disruption has greatly reduced the need for paperwork when it comes to applying for insurance and loan applications. Remittance services have also been transformed by this technology, making it faster, affordable and convenient.
E-wallets for quick, easy and safe payments
E-wallets such as PayPal, Apple Pay, and Airtel money are becoming increasingly popular among people. These fintech products allows users to store their passwords and payment information for numerous websites and payment methods.
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Where is Fintech headed?
Undoubtedly, the year 2020 was not the best for many industries due to the Coronavirus outbreak. However, the fintech market reported rapid growth during this period.
Thanks to fintech solutions, businesses, companies, and consumers were able to manage their financial operations without the need for physical contacts.
Though the advancements in financial technologies are happening at a very fast pace, we have only begun to scratch the surface of what is possible and how fintech is going to be changing the nature of banking in the future.
Investors are pouring investments of hundreds and millions of dollars into fintech startups. According to Statista, as of February 2021, the total number of fintech startups in America alone was 10,605.
The future of fintech
The future of Fintech is closely tied to the blockchain technology because of the trust and transparency it guarantees, reducing the time needed for transactions and improving the cash flow.
Fintech has the potential to enhance the experience, speed and efficiency of many aspects of daily life. Adoption of fintech software development and technology is the next big thing that is going to boost the cycle of productivity and growth in nations.
However, for fintech to truly take over the market, there are some challenges in the financial sector that need to be overcome first. Especially in the data protection and regulatory space.
With so many technologies such as AI, blockchain and big data in use, the best way for business leaders to win tomorrow’s customer is by adopting fintech applications in their own business models.
Fintech has been a game changer in making things more convenient for traders and businesses trying to grow outward. The number of fintech software development companies keeps growing, increasing their business in our highly modernizing world.
Looking for a reliable company for fintech software development? Get in touch with InvoZone today to build innovative, invincible, and enhanced financial solutions.