5 Ways Fintech Companies Outperform Conventional Banks and 3 Reasons for Collaboration: The banking world is changing and it seems that it is being overrun by Fintech companies.
The conventional banks are just starting to understand the whole digitalization and what it entails at the same attending to their customer base. Also, the taste of customers are changing, many seek more high-tech solutions to financial transactions.
If you are just hearing of Fintech companies, why should you take them more seriously? And if you have heard of them, read on all the same. The companies have gotten better.
The Fintech companies outperform banks in some of the services both institutions offer; the most notable being lending. In this article, we will examine just 5 ways (I had to shorten the list) Fintech companies outperform banks.
- Fintech companies process data faster and are more efficient. Take for example lending, Fintech companies provide loans faster than conventional banks and experience lower default rates. What is the reason? A fully automated process.
- Owing to the fully automated process and real-time monitoring, Fintech companies spend less on operational costs, saving a lot in return. And for activities that require real-time monitoring like interest rates, Fintech costumers end up paying less than their counterparts that patronize banks.
- Because of lower costs across the production of services, Fintech companies can offer services at a reduced price. Offering services at such price will be a loss for banks.
- Fintech companies also offer their customers the high-tech feel that they desire. Customers that patronize their platforms can do so without any hassle online or on their mobile phones.
- They do away with the unwanted bureaucracy. For example, peer to peer payment and other services are without unnecessary bureaucracy. Transparency through the whole process involved in a Fintech transaction is another advantage it has over bank transactions.
Reasons for Collaboration
- The conventional big banks have the customer base; the Fintech companies will do well to partner with them. The banks, on the other hand, should be willing to accommodate as many credible Fintechs as they can.
- The Fintech companies have the technological base. The process of operation of Fintech companies is more efficient than normal banks. To offer better services to their customers, banks can leverage on this good technological foundation.
- Banks have deep pockets in case of a cyber-attack. While Fintech companies may boast better security, banks can boast of deeper pockets to deal with such situations.
Fintech companies do not cause a disruption for banks, rather there can be a wonderful collaboration between the two industries.