You might not be aware of it, but there are some big shifts in banking systems going on at the moment, and you are helping to influence the way banking will operate in the future. If you’re wondering “What shifts?”, you’re not alone, for although technological developments are causing much debate and excitement among the banking industry and financial technology companies, the revolutionary nature of these changes hasn’t had a very obvious impact on the general population.
What is changing?
The basic requirement for a bank is to have a bricks and mortar location for customers to visit and transact their business. With the popularity of online banking, traditional banks have found there is a high level of enthusiasm amongst customers for the convenience of banking online, and the growth of this service model has led to a significant reduction in numbers of customers visiting banks in person. It might not be news to you, and it’s likely you make use of online banking facilities yourself. What you might not be so aware of is the emergence of financial services businesses that operate on an entirely different model, using advanced technology to provide banking services to customers around the world without having any physical branches.
How is that possible?
The software behind these changes comes under the umbrella of financial technologies, known as FinTech. These technologies essentially enable new companies to offer a banking service, providing demand deposit accounts with FDIC (Federal Deposit Insurance Corporation) approval and acting as an automated clearing house. The service works by using API (application programming interface) technology. It is software that creates a link between the website you are browsing and the financial service with which you are registered, enabling you to make payments without leaving the original web pages. Entrepreneurial fintech solutions provider such as Cambr, have been developing this software and integrating it into the infrastructure of commercial websites, causing a degree of alarm within the banking community as it assesses the impact of these financial upstarts.
What does it mean for consumers?
There will be far more choice in how you control your money and make payments, and while your local bank won’t be disappearing anytime soon, you will find there is an increasing number of alternatives to the banking system you are used to. How these systems evolve will be heavily influenced by consumer uptake and what aspects they embrace or reject.
What about security?
As with any web-based service, concerns have been raised about the security of customer information. Providing the service is regulated there shouldn’t be an issue, and security is one of the priority areas for any software-based company. Being able to demonstrate reliability and security are crucial for these new banking enterprises and will be a critical factor in determining whether they succeed in the longer term.
The rise of financial technology businesses is bringing rapid change to traditional banking in the same way Amazon has affected online retail. The presence of banking apps and online services in consumers’ everyday lives will become more widespread shortly, making payment processes faster and easier for everyone.
Founder Dinis Guarda
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