Technology is changing every spectrum of life, and recently those changes have impacted even the financial world. Every area of finance—the services, products, and the processes that govern it—are now being changed by financial technology, or fintech. Thus, banking in a traditional sense is becoming increasingly archaic.
Fintechs intend to create simplistic, streamlined fixes for some of the financial world’s biggest issues. For example The Wall Street Journal recently published an article that likened one fintech CEO’s vision to that of the driving service Uber. Why pay your bank for additional products when you can carry the solution in your pocket via your smart phone?
This points to a trend overall: banks who fail to invest in the technological advances of the times will likely also fail to keep pace. The focus of Capgemini’s World Retail Banking Report 2016 points to the fact that fintech firms are winning the popularity contest, by a landslide. The report notes that banks not only underestimate just how sweeping the impact of fintech firms are, but also how their customers feel about them, with just over a quarter of banking institutions viewing fintechs as actual competition.
With that being said, banks are huge, in more ways than one. Start-ups have a long way to go before they can reach the market capitalization that a presence like Wells Fargo, at $280 billion, has. Their pockets and their customer bases run deep, and have for decades.
Ultimately, any company, in any industry, that utilizes technology is guaranteed an edge that those who remain unchanging don’t have. The question largely is whether or not banks will be able to implement strategies quickly enough to compete with the force of nature that fintechs are already proving to be.
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