Technology and innovation within the financial services industry has completely changed the game. As a millennial, I remember the old days of begging my Mom to bring me to the bank to deposit my birthday checks. I also had to memorize my account number to fill out that pesky paper slip to take out my babysitting money. Now, those events are very distant memories thanks to top tech disrupting traditional banks. But can these old school banks keep up with my generation’s needs? With GenZ? And more importantly, at speed and scale?
Sadly, a lot of older banks are just not there yet and can’t respond as quickly to customer wants and needs like FinTech’s can.
Keep Up or Say Sayonara to Younger Consumers
During a recent episode of GDS Group’s ‘Strategy for Breakfast,’ we interviewed Financial Educator and Founder of This Girl Talks Money, Ellie Austin-Williams. Ellie touches on this very topic claiming, “FinTechs and digital banks have sped up the process of banking making it smoother and have taken a lot of the chunkiness out of it and that is where a lot of the older institutions are struggling to keep up.”
Fintech has altered the lives for billions of consumers, worldwide. It has changed the way we buy things, we pay others, how we invest, etc. With apps like Monzo and Venmo more and more people are now banking digitally and have little interest to step into a bank branch. A PwC Digital Banking Consumer Survey of more than 6,000 retail consumers found that more consumers bank digitally with 61% interacting weekly on digital channels. But get this – some banks are still not offering the option to open a new account, digitally.
“20-25% of consumers would prefer to open a new account digitally but are unable to do some today.”
PwC’s 2021 Digital Banking Consumer Survey
Hope for the Future
While most traditional banks are not keeping up with these start-ups when it comes to technology and agility; however, they can compete by acquiring and buying these smaller FinTech start-ups to bring those platforms along with them. Ellie mentions, “young people still have this inherit distrust of new things. Older banks are relying on this.”
Speaking of buying up these start-ups, Ellie also shares that some of these buy now pay later companies are acquiring these FinTech companies.
“A lot of the bigger players like Klarna, a FinTech company, are buying smaller providers to increase their market share.”
Striking a Balance
Are banks doing enough to serve all their consumers? Simply put, there is no one size fits all. Each consumer will have their own preferences. Ellie agrees. “I don’t think you actually can service all of those customers under one roof, no one has managed it this far.” However, banks need to try to find a balance, innovate, all while remaining reliable and winning the trust of their consumers.
Embrace the Tech to Stay Afloat
While it’s highly unlikely that FinTech startups will successfully overtake the big banks, it’s clear they have disrupted the financial industry. While traditional banks are now rethinking their digital approach – they are still combatting challenges such as: moving away from legacy platforms, being able to cater to a generational divide, and securely using customer data. The fact of the matter is that traditional banking will never look the same again and those institutions who are digitally mature are the ones who will remain afloat.
To listen to the full podcast episode titled, ‘FinTech Yourself Before You Wreck Yourself’ search for Strategy for Breakfast on wherever you stream your podcasts.
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