Everything evolves, and online banking is currently undergoing a sweeping revolution thanks to fintech—the pairing of Finance and Technology, often driven by Artificial Intelligence. And with global investments of fintech companies hitting $135.7 billion in 2019, this pairing is showing no signs of slowing down.

Financial organizations are leveraging technology to boost the customer experience in numerous ways.

But what is fintech exactly and how is it changing online banking forever? In this article, we take a look.

WHAT IS FINTECH?

Fintech marries together financial services with digital technology to help financial organizations improve their customer experience. For example, fintech has created innovative services and products that can:

  • Help customers get faster responses
  • Improve payment processes
  • Help banks gain deeper insights into each customer via big data

Ultimately, fintech has made it easier for customers to access their finances and numerous other applications. It poses a threat to the brick-and-mortar and traditional way of banking.

HOW IS FINTECH CHANGING ONLINE BANKING?

As we’ve seen, fintech is designed to optimize the banking customer experience. Let’s take a look at exactly how it’s changing online banking.

Customer-Centric Applications

With so many financial organizations battling it out to win the next customer, each one needs to come up with something that allows them to stand out from the crowd.

And because customer experience is so important to – well, the customer – customer-centric applications are a tantalizing prospect.

Once upon a time, banks designed applications and processes that suited their own needs. That’s all changed. Customers now demand that the focus is shifted onto them. For instance, customers are no longer willing to wait too long for an online response, neither are they prepared to keep filling out lengthy forms. The exhausting process of downloading, scanning, signing and printing documents is antiquated, too.

By innovating with customer-centric applications that reduce friction wherever possible, such as payment gateways, financial organizations are able to improve the customer experience.

Digital First Collaboration

The COVID-19 pandemic forced many businesses to pivot to remote teams working from home. As of the start of 2021, most of these businesses will continue with remote teams, 41% of employees expected to at least stay remote on a semi-permanent basis beyond the pandemic.

As such, it’s really important that financial organizations adopt digital tools that are there to help secure their access to files while facilitating digital collaboration. For instance, physical documents will need to be converted into digital documents without any compromise where data integrity is concerned.

Fintech provides a solution by allowing firms to integrate features such as managing, editing and viewing documents into existing fintech applications. This allows organizations to keep track of their documents, and to keep them safe.

Conversational Banking

Customer experience is, by and large, the bedrock to success for any online banking organization. And the thing is, what customers want in 2021 and beyond is much more than they’ve ever wanted in the past.

Fintech has evolved to the point where it is now heavily customer-focused. To that end, fintech has created something called conversational banking.

What’s conversational banking?

Conversational banking allows the bank to provide a seamless banking experience via messaging platforms and chatbots. Fintech chatbots (which are driven by Artificial Intelligence and machine learning) are able to answer basic customer queries and perform tasks, such as loan requests, money transfers and money management.

The upshot is that conversational banking allows customers to get faster answers (chatbots are available 24/7 and reduce waiting times). It also creates a hassle-free experience, plus it allows the bank to gather data insights about each individual customer that allows them to tailor the experience even more.

It’s also worth mentioning that chatbots have simplified the authentication process, too. Chatbots are able to authenticate securely a customer’s account without them even needing to log into the app.

Banking Partnerships

If banks are to leverage fintech’s full potential, it’s a smart idea if they form partnerships with the source – fintech startups.

In fact, this is what some banks are already doing: They’re entering partnerships with fintech startups that allows them to:

  • Capture more customers
  • Engage better with existing customers across a variety of previously unexplored channels

Banks are indeed pouring huge resources into their infrastructure and tools as they seek to overhaul their processes and get to grips with what customers expect in 2021 and beyond. This will allow them to remain competitive – and working with fintech firms is a real secret weapon.

The real beauty is that fintech developers are now establishing themselves as key players in the banking sector. As they’re at the heart of fintech, they’re able to create new apps and integrations, and integrate them into a bank’s current legacy systems straight away. Ultimately, this allows banks to reap massive benefits.

Omnichannel and Branchless Banking

One of the ways fintech is revolutionizing online banking is via omnichannel and branchless banking.

What is omnichannel banking?

It’s when customers can access their whole banking system from various channels, including mobile, social and online. Customers want this kind of seamless user experience – they want to be able to flip from channel to channel without any hassle.

And it’s by adopting the omnichannel approach that banks will come to rely a lot less on their traditional brick-and-mortar branches.

BENEFITS OF FINTECH REVOLUTIONIZING ONLINE BANKING

Banks will be glad to hear that fintech can boost their financial coffers. But it can do so much more than that. The benefits of fintech revolutionizing online banking include:

Build Brand Reputation

There are two ways fintech can build brand reputation. One is via the bank working alongside a fintech startup (see above) in a banking partnership. For example, if a highly regarded fintech startup launches an app that the bank then uses, the reputation of the bank will automatically grow.

The other way fintech can build brand reputation is by improving customer support and the customer experience. As we’ve seen, fintech boosts and creates a seamless interaction between the client and the bank, which therefore helps to enhance its reputation.

Ability to Scale Quickly

This all depends on the needs and wants of the customer. But if the customers’ needs and wants are high, banks can work together with fintech companies to come up with ways to scale quickly.

This is really the beauty of a bank entering into a partnership with a fintech company: They can gather feedback and understand the customer response. Then, the bank and the fintech company know what to do next.

Also, if the customer response is milder, the banks and the fintech’s can even scale down should the need arise.

Reduced Costs

A bank could decide to look for ways to improve the customer service and make their operations more customer-centric independently of fintech.

In other words, they could go it alone.

In the long run, though, this could be a lot costlier and more time-consuming. Instead, it’s a smarter idea for the bank to work alongside fintech companies who already have the technology and software that’s designed to improve the online banking customer experience. Partnering up with a fintech company will allow the bank to save money and time.

Broadened Customer Base

Essentially, the benefits are mutual and shared out. The bank can gobble up the fintech company’s user base, and the fintech company can do likewise.

For example, a bank could find that it’s able to tap into a previously unconquerable younger customer base that’s currently held by the fintech firm. This allows the bank to broaden its customer base and boost its revenue.

At the same time, the fintech company may find that their apps increase their demographic, too. Because of the win-win situation, it’s possible for banks and fintech companies to enjoy a harmonic relationship.

USE CASES OF FINTECH IN ONLINE BANKING

As we can see, then, fintech is pretty good for online banking! But how exactly can it be used to improve online banking? Let’s have a look at some use cases:

Fintech Can Transfer Money

Chatbots that are driven by Artificial Intelligence are highly intelligent, highly skilled workers. They’re also trustworthy and can be used to help clients carry out basic tasks, such as transferring money. Fintech chatbots can also pay bills, setup payments (and cancel others), as well as pay off credit cards.

This is exactly what Erica does, a mobile assistant app that was designed by Bank of America.

The best thing is that the whole process is super simple. A customer just needs to tell the chatbot what it is they wish to do (such as transfer money), and the chatbot duly responds. Over the course of a minute or so, the bot gets the client to where they want to be.

Fintech Lets Customers Check Their Balances

Chime is one example of a fintech app that acts as a digital bank. Using Chime, a customer can get access to their paycheck early, as well as daily balance notifications. They also get real-time transaction alerts which in the main helps them manage their money better.

Other chatbots, meanwhile, offer balance estimates and will let the customer know if they’re coming dangerously close to being overdrawn.

Fintech Detects Fraud and Bolsters Security

Online banking comes with increased risks, both to the bank and the consumer. With online banking, customers and their details are vulnerable to hackers who are constantly finding new ways to access data and steal people’s identity. Not cool.

Fortunately, fintech provides solutions that go a long way to detecting fraud and bolstering security. For instance, one innovation is the EMV chip now found on credit cards which helps to reduce card cloning.

Meanwhile, software company Feedzai offers retail banks anti-money laundering and fraud fighting solutions that are driven by machine learning. With multi-channel fraud protection, the bank is able to establish a strong relationship built on consumer trust and confidence.

Fintech Answers Basic Customer Queries

Customers, of course, have lots of questions.

Let’s imagine one wants to know how to apply for a credit card. While they could raise this question with a human operator, that just wastes time and valuable resources when an AI-driven fintech chatbot can answer it instead with just as much accuracy.

Not just that, but the chatbot uses natural language processing which means their questions and answers are conversational and human.

WRAPPING UP

Fintech is changing the face of online banking, making it more customer-centric. It’s important that banks work alongside fintech companies to integrate apps and solutions that allow them to give their customers more of what they want, as well as stand out from the crowd.

Author’s Bio

Ashley Kimler is the founder of CopyNoise. She’s been working remotely in the tech space since 2014. Interested in getting her advice on your blog? She’s always looking for the opportunity to share her perspective with new communities! Follow @ashleykimler on Twitter to see what’s new.

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