The development in fintech – not instead of banks, but together with them
Back in 2016-2017, many analysts assumed that blockchain and cryptocurrency would force out banks to the back of the story. Among the arguments were cited including those that traditional financial institutions only act as costly intermediaries between customers and payment systems.
The cryptocurrency market has been reeling for more than a year and a half. It turned out that digital assets are a niche product that has no place in stock markets. Bitcoin does not affect the global economy, as oil does. The high volatility of Coin causes only the approval of traders at specialized sites. The constant initiatives of the Winklevoss brothers to issue BTC-based securities are not approved by the US government. But this does not mean that cryptocurrency is not needed. Digital assets are what drives the high-tech market forward. The benefit of cryptocurrency is already noticed in traditional banks, where innovations usually come with difficulty.
At the same time, the blockchain is recognized as one of the main inventions of the decade. The advantages of a distributed registry are used by the Carrefour, Wal-Mart and many others. The supply chain is tracked through the blockchain, and smart contracts have come to replace conventional waybills. Subjects of the Internet of Things also partially communicate via the blockchain, especially when it comes to the purchase of components or consumables.
Financial technology is much broader than cryptocurrency and blockchain. They are associated with high technology in the banking sector. They, too, were predicted of a cloudless future in the form of the replacement of traditional financial institutions. But the miracle did not happen – in 2017-2018, banking structures selectively acquired Fintech startups to possess new technologies. 2019 showed that banks can do a lot themselves. Financial structures have become dynamic IT organizations.
The development in fintech – why competition has intensified in banks
Banks have both benefits and losses in a situation where they are slowly becoming fintech companies.
The benefits are obvious. Thanks to artificial intelligence and machine learning, bots are created that are capable of taking on a part of communication with customers. This leads to savings on support staff. Banks close their branches and dismiss employees – most of the processes are carried out automatically by means of applications for smartphones and convenient websites. All this allows you to reformat the business and send funds to development.
Of course, there are downsides for banks. Sharpening competition. Previously, a steady stream of customers received a structure geographically well located. “Bank at Home” is an analog of a grocery store that is popular only because it is nearby. Now, mobile applications are equally available to all customers. And the choice of the bank is influenced by other factors, namely the quantity and quality of the services provided.