Is 2021 the Year Banks Catch up with Fintech?
All banks had to make major changes in 2020 – perhaps changes they weren’t quite ready to make but the universe gave them no option.
With lockdowns and restrictions in place, banks had to think outside the box if they wanted to remain profitable. Customers couldn’t just walk into a bank any longer. Many had to make reservations and yet others had to figure out other ways to handle transactions, which leads to the thought – ‘will banks catch up with fintech in 2021?’
It could be. Here’s why.
More People are Going Digital
Millennials were among the first to adopt digital banking as the norm, but any older generations ignored or avoided it at all costs.
2020 changed all that and now millions of people use digital banking – even those who swore they wouldn’t. This means banks could be getting closer to fintech companies that already offer digital options for banking.
Customers are more likely to stick with their local bank if they offer digital options than they are to jump on board with a fintech startup.
Banks Have Access to Incredible Security
Banks have always been in the business of keeping customer information safe. With the onset of digital banking services, they have a whole new set of worries to focus on. Can they keep up?
Cybersecurity has often been a thorn in most banks’ sides. Just look at the cybersecurity breaches Bank of America and Fifth Third Bank experienced in 2020. This could be a disadvantage for banks unless they have the knowledge and power of technological powerhouses that haven’t been swept up by fintech businesses as of yet.
Banks have Loyal Customers
Up until recently, there was something special about a banking relationship. Customers had their favourite bankers and even their set days to head to the bank. With digital banking, there’s a whole new set of issues because you can’t create the same personal relationship you can create in person.
Because banks already have loyal customers, they can use that to their advantage, keeping customers even with the switch to mostly digital banking.
If banks can find ways to entice their existing customers or even bring in new customers, they may have the leg up on fintech startups just because of the experience and knowledge they have from being in the business for decades versus a few months or years, like fintech startups.
Will Banks Catch Up?
Whether or not banks will catch up is yet to be seen. Do they have the opportunity to do so?
Absolutely. Banks have the money, clients, and potential to be a powerhouse. Will they catch up with the technology, know-how to adopt it, and be able to convince customers that they are more reliable and offer more than big startups?
That remains to be seen. The bottom line, however, is that most, if not all banking services can be done via a smartphone, tablet, or computer today for those who are comfortable doing so.