Every day, it seems, there’s a new FinTech company springing up to challenge the status quo of the financial world. And they’re winning. FinTech startups have taken the financial world by storm in the last few years. But what exactly is driving this FinTech revolution? And how can you stay ahead of the curve? We’ll answer these questions (and more) today, including how registering for FinTech online courses offers you a powerful competitive advantage in the field.
To begin, here’s a little FinTech 101. Financial technology (AKA: FinTech) refers to the use of technology for delivering financial services. This includes mobile payments, online banking investing and lending platforms. In short, FinTech is changing the way we interact with our finances – and it’s doing it at an unprecedented pace.
Why Legacy Financial Institutions Are Losing Ground to FinTech Companies
There are many reasons why FinTech companies are gaining ground on legacy financial institutions.
FinTech meets customer needs more effectively
FinTech companies meet customer needs that traditional financial institutions (FIs) do not. FinTech companies are agile and able to move quickly to address changing customer demands. They’re also able to provide customers with the latest innovative FinTech solutions.
In contrast, FIs are often slow to react to change and can be reluctant to embrace new technologies. This means they can miss out on opportunities to meet customer needs more effectively.
Moreover, FinTech companies are often better placed to target specific customer segments. This is because they have the flexibility to develop products and services that meet the unique needs of specific niches. This is in contrast to FIs, which typically offer a ‘one size fits all approach that doesn’t always meet the needs of individual customers. Rather, FinTech companies are agile enough to develop targeted solutions that resonate with customers.
FinTech companies have a customer-centric approach
Another key reason FinTech companies are winning is that they have a customer-centric approach. Most understand that the customer experience is paramount, and they work hard to deliver an outstanding experience at every touchpoint.
FinTech companies also place a strong emphasis on building trust with their customers. They know trust is essential to winning (and retaining) customers in the financial services industry. And they go above and beyond to build trusting relationships with their customers.
If you’ve ever stepped foot into a traditional financial institution, you know that customer experience can often be impersonal, cold, and frustrating. FinTech companies are changing this by delivering a more human, personal touch.
FinTech is entering new markets
FinTech companies can also tap into new markets that traditional FIs may be reluctant to enter. For example, FinTech companies have been quick to capitalize on the growing demand for mobile banking solutions in developing countries. This is an area where traditional banks have been slow to move, partly due to concerns about profitability and regulation.
FinTech has a lower cost base
Another critical advantage that FinTech companies have over traditional FIs is their lower cost base. FinTech companies often operate with a leaner business model than banks. This means they can offer customers competitive prices and still make a healthy profit.
Conversely, traditional banks are burdened by high costs, such as the costs of maintaining a large branch network. This makes it difficult for them to compete on price with FinTech companies.
FinTech has access to new sources of funding
FinTech companies also have access to new funding sources that can support growth and innovation. Today, many FinTech companies can take advantage of crowdfunding platforms to raise capital. On the other hand, traditional FIs typically rely on more traditional funding sources, such as loans from other banks.
FinTech companies are innovation-focused
They’re also more innovation-focused, which allows them to develop creative solutions to problems that FIs haven’t been able to solve. In addition, FinTech startups are often founded by entrepreneurs who deeply understand the latest technology trends. As such, they’re able to develop innovative solutions to the challenges faced by the financial industry.
Alternatively, FIs are typically slow to adapt and embrace change. This resistance to change can stifle innovation and prevent FIs from developing new solutions that could benefit their customers.
Further, FinTech companies benefit from the fact that legacy systems and processes do not encumber them. This lack of legacy baggage gives them the freedom to experiment and take risks in a way that FIs simply can’t. Consequently, FinTech firms can innovate at a much faster pace than traditional financial institutions.
FinTech companies are benefiting from the rise of mobile and digital channels
Finally, FinTech companies benefit from the rise of mobile and digital channels. More and more people are conducting their financial transactions online or through smartphone apps. This shift in consumer behavior is playing into the hands of FinTech startups, which are typically more nimble and better equipped to cater to the needs of digital-savvy consumers.
Historically, FIs often lag behind when it comes to adopting new technologies. They can be slow to develop mobile-friendly platforms and apps, for example. In turn, they risk losing customers to FinTech firms that can better meet their needs.
The Bottom Line
All in all, there are a number of reasons why FinTech companies are gaining ground on traditional financial institutions. FinTech companies are agile, able to meet customer needs more effectively, and have a lower cost base. From being more customer-centric and innovation-focused to benefiting from the rise of digital channels, FinTech firms have a lot to offer consumers. But this is just scratching the surface of FinTech and its disruptive potential in the financial industry.
If you want to stay ahead of the curve, registering for FinTech online courses is a great way to do it. FinTech online courses can help you stay up-to-date with the latest developments in the field and give you the skills you need to compete in the FinTech job market.