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How Fintech is Reshaping Customer Experience in Finance

 

Fintech adoption map

Source: EY

 

Fintech startups are changing customer experience in finance for the better. These new companies use innovation to make financial services more efficient, accessible, and affordable for everyone.

Some say fintech companies will kill the existing financial institutions. Others contend that what they bring won’t really change the life of customers.

In this blog post, we will take a closer look at what fintech is and how it is transforming customer experience in finance. We will also explore the challenges that these companies face and examine their potential impact on the industry as a whole.

 

 

Will fintech companies kill traditional banks?

 

Fintech companies have been hailed as the death of traditional financial institutions like banks. But that’s not necessarily the case. It’s true that fintech companies are innovating at a breakneck pace, and they’re attracting a lot of attention from investors and consumers alike. But that doesn’t mean that they’re going to kill the existing players.

In fact, this new scenario may actually end up benefiting banks in the long run. By partnering with challenging new players, banks can gain access to cutting-edge technology and new ideas. They can also tap into fintech’s vast pool of talent. Instead of seeing the new wave of innovation as a threat, banks should view it as an opportunity. So fintech won’t kill the existing institutions. Nonetheless they will improve the world of finance. An interesting article from the Economist identifies three key areas where this is happening. Let’s have a look at them.

 

 

Innovation cut costs and improve the user experience

 

When it comes to user experience, fintech startups are quickly gaining ground on traditional financial institutions. And there’s good reason for it: they are able to offer lower costs and improved quality of service. In fact, a recent study by Boston Consulting Group found that fintech startups are twice as likely as traditional banks to be rated “excellent” by their customers.

Fintech startups are also able to be more innovative in their product offerings. For example, fintech companies have changed the way we invest by giving instant access to a wide array of products (see Robinhood, BUX etc.), by gamifying the experience (eToro, BUX) or by reducing the hurdle to start (e.g. Peaks).

This kind of innovation is not only based on cutting-edge technology, but also on better understanding users’ needs. So it’s no wonder that fintech startups are quickly gaining ground in the financial world.

 

 

Clever new ways of assessing risk with data-driven technology

 

Another area where fintech companies are re-shaping the rules of the game is risk assessment. By harnessing the power of data, innovative companies can more accurately assess an individual’s creditworthiness. This information can then be used to make better lending decisions, which can ultimately help to reduce the risk of default and improve financial outcomes for both lenders and borrowers.

In addition, data can be used to identify fraud and other risks more quickly and efficiently. As a result, fintech is playing a major role in helping banks and other financial institutions to better manage risk.

 

 

Fintech will create a more diverse and more accessible market for financial services

 

Increased access to financial services is one of the most impactful advantages of fintech. While in many parts of the world most people remain unbanked (with no access to financial services), startups are creating new opportunities for people to access financial services, regardless of their location. In Africa, for example, mobile money platforms like M-Pesa have greatly increased access to banking products and services. As a result, more people are able to save money, make payments, and access credit. This is having a transformative effect on African economies and helping to reduce poverty levels.

 

Looking ahead, it is clear that fintech will continue to create new opportunities for people to access financial services. This will help to create a more diverse and accessible market for financial products and services, benefiting consumers and businesses alike.

 

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