Technology has brought with it many advancements and it has heavily influenced how many industries are conducting their business. Organizations that fail to incorporate technology into their way of doing business are losing out to competitors that have fully embraced technology into their daily operations.
Failing to do so means that a business may fail to groom the next big target consumer demographic, particularly members of ‘generation Z’, i.e. those born during the technology era.
Organizations and businesses that specialize in the banking and financial services niche are now focused on being strategically positioned when it comes to tech. Which will enable them to capitalize on the use of technology to drive their financial service offerings to these target customers and potential clients.
Up until now, the majority of banking institutions and financial services firms focused their efforts on increasing their return on investments (ROI), owing to slow economic growth, due to the 2008 financial crisis. This primarily consisted of cost reduction measures rather than new customer acquisition.
Nonetheless, more and more financial institutions are now opting to re-invest their profits into technological innovations with an aim of boosting their profit margins.
Let’s shine a much-needed light on some of the current trends that are shaping the banking services industry.
Increased Focus on Digital Transformation
The banking service industry is experiencing a shift in its scope of operations, as the majority are opting to speed up the implementation of technology into their business processes. This is in order to increase the efficiency and ease of access to their financial services.
Businesses focusing on financial services offering such convenient services to their customers tend to enjoy increased profits as customers experience satisfaction when accessing and using their services.
The Emergence of SBA Financing
Just like FHA and VA loans help individuals to buy a home, Small Business Administration loans (SBA loans for short) help small businesses obtain funding by reducing the risk taken on by the loan provider. Technically, they aren’t actually loans. Rather like FHA and VAÂ they are a guarantee of up to 85% of the loan amount. That minimizes the risk to lenders, allowing them to approve more small business loan applications.
Fintech Banking
A lot of banks and financial service (BFS) companies have realized that capitalizing on digital opportunities is the best bet for future growth.
According to fintech weekly: “The term Fintech (Financial Technology) refers to software and other modern technologies used by businesses that provide automated and improved financial services. The fast and innovative progress such as Mobile Payments changed the way we manage our finances. Tech-savvy customers, especially millennials expect money transfer, lending, loan management, and investing to be effortless, secure, and scalable, ideally without the assistance of a person or the visit of a bank.”
Previously fintech businesses were viewed as competitors since they were set up to capitalize on the void that was created by the BFS’s inability to adapt to the changing technological trends. For instance, things like Crowdfunding allows artists, charities, small businesses, and entrepreneurs to generate support without needing conventional investors.
Nevertheless, nowadays it’s not uncommon to come across partnerships between banking institutions and fintech corporations.
This is occurring as banks have realized that there is more to gain by collaborating.
One advantage that banks enjoy is an increase in their customer base numbers. Thus, it’s sensible to conclude that the current banking and fintech partnership model is playing a major role in re-modeling the banking landscape.
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