When discussing fintech, it’s common for experts to focus on how this technological revolution will impact the overall relevance of banks and other traditional financial institutions. Some argue that banks will no longer be relevant in a short time. Others suggest that banks can partner with fintech firms in order to survive shifts in the financial services industry.
And yet, there are also some who believe that traditional banks are so entrenched in the sector that it’s unlikely fintech will do away with them completely. Instead, they suggest, the rise of fintech may simply result in banks adjusting their business models to better serve consumers.
Consumers No Longer Have to Settle
For a very long time, customers had limited options when seeking financial services. Because there were few alternatives to traditional financial institutions, they had to settle for the quality of service banks were willing to offer.
Fintech has changed that. Now customers have the opportunity to take advantage of more convenient options when seeking key financial services. However, according to some industry insiders, this does not mean that banks must watch as their customers flock to the competition.
Instead, it simply means that banks will now be forced to change with the times. To stay competitive in the industry, they must identify the advantages that new fintech companies offer. They can then simply shift their own business models in a manner that addresses consumer need.
That’s a key benefit of the fintech revolution that should not be overlooked. Obviously, consumers benefit when the businesses providing them with necessary services are forced to improve upon those services. That said, there’s good reason to believe that traditional banks and similar financial institutions will also benefit from these changes in the long run.
Fintech Could Improve Banks’ Business Models
It’s possible for banks to innovate in unique ways. Banks that have been doing business the same way for years are capable of positive change. They just haven’t been forced to change in a very long time. They’re accustomed to competing with each other, instead of competing with outsiders. This inevitably results in some degree of stagnation.
Times are now changing. Customers are opting to take advantage of fintech solutions in many instances. Thus, banks must consider, for the first time in a long time, how they can revolutionize their own business models. This may very well result in new ways of serving customers that allows banks to reinvent their core identities.
In other words, innovating can be more than a means of simply keeping existing customers. Banks may now find they can innovate to such a degree that they will actually attract new customers.
Fintech May Increase the Supply of Talented Workers
The rise of the fintech revolution can also provide benefits to traditional financial institutions. It may provide them with talented workers who have the skills, experience, and insights necessary to drive key innovations.
Prior to the fintech revolution, young people interested in working in the financial services industry studied traditional ways of doing business. As a result, most of the new talent working for banks up until recently has consisted of individuals who don’t offer the kind of dynamic new perspectives that yield major improvements.
Again, fintech is changing that significantly. Colleges across the United States (and around the world) have identified a demand for fintech-centric programs among new students. Intelligent, ambitious young people understand that fintech offers many job opportunities. They’re eager to acquire the skills and knowledge they’ll need to work in the field.
The Stability of Banks May Appeal to the Next Generation of Workers
This by no means indicates all those students are exclusively interested in working for new startups. They may very well wish to find jobs in organizations that offer greater job security and reliability.
They may graduate with a specialization in fintech. However, they could certainly be interested in pursuing careers in which they can leverage their newfound expertise to help traditional banks adjust their business models.
Additionally, the rise of fintech has also given rise to online fintech programs. Banks that pay attention to these shifts can innovate more efficiently and effectively by recruiting talented young workers who will help them better understand what changes they need to make to stay current with the times.
Bank-Fintech Partnerships Should Still Be Explored
Of course, this isn’t meant to suggest that banks should abandon the idea of partnering with fintech startups. While an influx of new talent is likely in the coming years as students graduate with fintech degrees, banks can get a headstart by coordinating with existing fintech firms to begin innovating now. The results could soon benefit both consumers and banks in major ways.