Digital technology has theoretically made it much easier for financial institutions to offer personalized service to their customers. Banks can provide personalized service in many forms. For example, by monitoring a customer’s transactions, a bank can identify products or deals that may be suited to a particular customer’s lifestyle.
This is one of the major reasons why customers are embracing fintech products, as they offer both personalization and convenience. Traditional financial institutions are beginning to realize that they must adopt these new features in order to survive the fintech revolution. According to a 2017 survey conducted by the research firm GfK, most major banking institutions stated that they are still striving to reach an advanced stage of personalized technological service. Most of the banks surveyed reported that they had either just begun to offer personalized services or were merely considering doing so in the near future.
Adapting to a Changing Industry
In order to thrive and stay relevant, traditional financial institutions must be able to offer the latest technology to consumers. After all, the financial industry isn’t the only sector where businesses have leveraged emerging technologies to better serve their customers. In retail, entertainment, and a wide range of other industries, businesses are exploring how they can use innovations such as machine learning, artificial intelligence, and even virtual reality to offers customers a more personalized and dynamic experience.
The result is that many customers have come to expect this kind of service. According to surveys, banks have sought to keep up with rising customer expectations. Thus, it’s no surprise that some leaders at traditional banking firms have expressed concerns about the rise of fintech. As banks work to adapt to a changing industry, fintech companies have stepped in and given consumers what they already want and expect with the latest technologies.
Banks Seek to Embrace Technological Innovations
As this blog has pointed out in the past, banks must aim to focus on the advantages that fintech offers. Banks are realizing that they must adapt to technological innovations in order to keep up with changing times and make the right impression on customers.
The reason why many such traditional financial institutions have been slow to change may simply be due to infrastructure issues. Up until recently, they have not been expected to implement technology in order to provide highly personalized service. Thus, it makes sense that they would not have spent much time concentrating on how to do so.
That’s not the case with fintech companies. From the start, their goal has been to use technology to better serve their customers. However, this does not mean that fintech startups do not have their own limitations. While the individuals who started these fintech companies may have a strong understanding of how technology can improve upon existing financial services, they might not be familiar with the applicable regulations. Working through these regulatory obstacles can be a challenge for fintech startups.
An Opportunity to Thrive
That’s why traditional financial institutions have an opportunity to thrive in this industry. Fintech startups can provide banks with guidance about the technological resources they need in order to thrive and provide customers with personalization and convenience. Meanwhile, banks can help fintech companies to efficiently streamline the process of coordinating with regulatory agencies.
This strategy of collaboration may be the best approach for both sides. Traditional financial firms are working to improve their services on the technology side. Banks can consider bringing in fintech innovators and leverage their forward-thinking approach to technology, while lending them a hand on the regulatory side.
Collaboration Will Ultimately Benefit Customers
While this approach is likely to benefit both fintech companies and banks, what’s most important is the fact that it will ultimately benefit consumers. If specific regulations prevent a potentially valuable fintech product from reaching the market, banks can speed up the process and allow customers to access the service sooner rather than later. Additionally, collaboration may mean that customers will not have to switch over their accounts to a new firm. If their bank partners with a fintech company, then they can enjoy the benefits of personalized service while remaining with the same institution.
Of course, we will have to wait and see exactly how fintech companies and banks actually go about collaborating. Both appear to understand the benefits that the other one offers. Seeing the issue from this perspective will benefit their customers in the long run.