Fintech: What Is It and How It Impacts Banking Sectors?

Rather than a jargon, Fintech has become the most preferable technology and companion for improvement of the finance sector and banking industry. In the last couple of years, the investment in the Fintech app development company has been whopping doubled.

It is the clear evidence that the digital solution is the only way to bring the revolution in the finance sector. The revolution has resulted in a great impact on the globally financial institutions and banks. Let’s know more about this digital revolution and its impact from this blog.


What is Fintech?

Derivation of the term Fintech is occurred from two terms digital technology and financial services. Considering the nutshell, this technology assists in using the digital technology promptly and simply by the startups to reach to a large number of users.

It will enhance the popularity of the startups as well by offering a number of innovative financial services and products to the consumers. It includes overall finance management, big data, online banking, alternative finance and mobile payments.

This technology has been introduced for using at back-end system of banks and other financial institutions. But over time, its definition and purposes has been changed completely. At present, it helps in encompassing multiple customer-based applications. After 2019, with the help of this technology you will be able to pay the insurance, other bills, manage finds and trade stocks at the same time.

The Fintech for banks impacts greatly in the way of accessing the respective finances by the customers. It ranges from insurance companies to investment and to several mobile payment apps. Sometimes it is also considered as the potential threat to the brick-and-mortar as well as traditional banks.

In the digital era, people are keen to opt for the services which are both safe and quick. They don’t prefer the outdated services of the traditional finance industries anymore. That’s why Fintech application has acquired such huge fame resulting in disruption to the outdated banking services and finance industries.

As per the statistics, in the last few years, the usage of Fintech for managing the finances has been doubled in USA. Most people prefer to use 1-3 apps for proper management of their finances. In fact, a great percentage of people are using these apps on a daily basis at the same time. Still, there are a huge number of people surviving without any bank accounts.

This application is the biggest revolution in changing their lifestyle too. Now, they have the option for accessing several financial services even without any specific bank account. For carrying out any financial inclusion, Fintech is the most suitable one as its cutting-edge as well as simple technology offers direct accessible to the respective finances.

How Fintech brings the change towards the financial industry

  • Smart Chip Technology

Smart chip ATM cards contribute a lot in controlling the financial loss during any mishap case. It is loaded with the EMV technology embedded in the chip. So the technology makes use of OTP (One-Time Password) for every individual online transaction. As the code is validated only for one on-going transaction it has improved the security to a great extent.

Even the code or card gets stolen, it will be make no sense or use at all. Still, bank officials urge the customers for memorizing the pin for avoiding any unessential troubles and hassles.

After adopting Fintech, banks are consistently hunting for the relevant ways for enhancing the security for combating against frauds and thefts. In contrary to it the magnetic stripe makes use of the same pin for every transaction putting at more prone to frauds.

  • Biometric Sensors

Since ever Fintech is implemented on the banking industry, it helps in the rise of numerous innovations. Biometric sensor is the biggest ever known innovation amongst them. Most ATMs have been featured with 2 impeccable technological advancements- Iris scanners and Biometric sensors. 

It has paved an exceptional way to the digital world by eliminating the necessity of carrying the plastic card. Interestingly, you don’t need to remember the Pin as well.

Besides much ease and convenience, the recent advancements have made the ATMs much secured for you. Hence respective accounts can be accessed by the individuals without password.

Account’s owner will be recognized with the help of eye, palm, fingerprint sensors and integrated mobile applications by the biometric ATMs. Some ATMs have also utilized micro-veins for eradicating the chance of minimal error in recognizing the owner of the account.

This technology is a sigh of relief to those who get panicked after losing of the ATM card. Now, they can easily access the funds from their respective bank account without the card.

  • Online Transactions

In 1980, MCA (Monetary Control Act) has been implemented for serving the purpose to promote the efficient payment options in the whole country. It will be done so by influencing the competition between Federal Reserve and private sector payment service providers.

ACH (Automated Clearing House) incorporates in the effective procedures of interbank electronic payments throughout the country. It includes direct debits of mortgage, bill payments, dividend payments, salary, social security and insurance premiums. After that, a massive increase can be observed in the credit card payments and online transactions. Even the trend is followed by the debit card users at the same time in the last couple of years.

  • Branchless Banking and Omni-Channel

Fintech application is the key to bring the entire transformation to the finance sector including banking system. From the branch-specific processes now the banking sectors adopting certain digital channels like mobile, social and online. Now, the reliability on human and brick and mortar branches have been alleviated to a great extent as well. That’s why most banks around the world have been adopting omni-channel banking!

  • Customer Service ChatBots

Fintech is coupled with some amazing services and applications loaded by the Fintech app development company. Customer service ChatBots is among one of them. Typically, it is bits of software which utilize processing of natural language and machine learning for learning new things constantly from the human interaction.

It is considered as the most effective because of the streamlining of the customer interactions like directing consumers to specific departments and proper handling of queries. Furthermore, it can be used for performing other functions as well like offering advice of investment to the customers. It is reliable for gathering specific as well as relevant info from the website of the banks at the same time.

Nowadays, it is a significant part of every bank as it has alleviated the expenses whilst enhancing the satisfaction level of the customers simultaneously. Even it allows call centers’ agents for emphasizing on the value addition too.

  • Artificial Intelligence (AI)

Over years AI (Artificial Intelligence) used to be the prime part of the Fintech application. Along with machine learning, AI is crucial for the detection of fraud and scams. Hence, by using it banks can come to know about any fraudulent transaction by the received alert. Then, it is accounted by the human investigation for determining whether the procedure is true or false!

Attacks detection become much difficult along with time as it is become much sophisticated. As a result, plenty of money and time has been consumed too! Even there is always a risk for the loss of consumer data and for overcoming this virtual challenge AI technology is adopted by the banks.

As per McKinsey, the embrace of process automation, data aggregation platform, machine learning statistical modeling has transformed the AML operations completely with imposing of new efficiencies.

  • E-Wallets

The huge expansion of E-wallet is clearly indicating the significance of Fintech services. Apple Pay, Android Pay, PayPal and Samsung Pay are the finest examples of leading E-wallet companies across the globe. These are totally reliable for meeting myriad of purposes such as booking tickets, international remittances, and utility bills and top-up, P2P payments and lots more.

A few instances of standalone wallets are also there named as Walmart Pay and Starbucks. It trickily allures a number of users by providing tempting exciting offers, reward points, lucrative cashbacks and much more. After its grand success, many banks have realized its integrity and adopting it as the collaborative measure for embracing the new technological advancements. 

  • Mobile Banking

The use of Smartphone has been increased to such extent that it forces the banking sectors to introduce their respective mobile applications. It will be generally loaded with the convenient Fintech banking services for the sake of the customers. These days, most banks possess their own mobile application with a great UI (User Interface).

Even fingerprint recognition is offered with some mobile apps by the Fintech app developers for ensuring the highest standard of security at the same time. It performs seamlessly without any hardware or biometric app. Rapid accessibility to funds is also available with this mobile application.

By using it several banking transactions and functions can be performed by the users from anywhere and anytime. It includes checking of account balance, check deposit, quick payment of bill and much more. 
Fintech involves with the advent of advanced technologies including high security and great banking experience. With the adaptation of this application, financial institutions and banks bring the drastic change in their outdated traditional services. Over time, it expands its way of serving to the people.

Even it is going to become much bigger and with Induji Tech all-new components like financial core banking software and retail banking software can be obtained. You will notice how it changes the life of the people with easiest global banking services.

Post a Comment

Previous Post Next Post

Contact Form