What traditional banks need to do to survive the Fintech era

Oluwatoni Olujinmi

In the past, banks’ original function was limited to the storage and transfer of actual cash. Yet in today’s internet-connected world, almost anything can be accomplished from a smartphone or desktop computer. What traditional banks need to do to survive the Fintech era?

There is no denying the profound effect that technological advances in dealing with money have had on the banking industry. In a similar vein, banks will unavoidably undergo transformation and adaptation as a result of the industry-wide trends that are bringing the financial sector into the 21st century.

Online banking emerged as a response to the growing demand for convenient and user-friendly financial services. Here is what traditional banks need to do to survive the Fintech era.

What should traditional banks do to survive the Fintech era

Digital transformation

Industries all over the world are realizing the importance of digitizing nearly all modern consumer services in order to offer meaningful benefits to their customers. This phenomenon has spawned a number of emerging cross-industry trends. Which have altered consumers’ expectations for gaining access to products and services.

To meet these customers’ needs, companies of all sizes have been scrambling to implement new technologies and update their processes. Particularly since the Covid pandemic, the banking industry has been hit hard by the wave of digital initiatives that has swept through and upended it. In the banking industry, customers are becoming more tech-savvy and demanding digital solutions.

It’s therefore not shocking that brick-and-mortar banks are falling out of favor and online banks are becoming the norm.

Customer experience

Traditional institutions should prioritize improving the client experience both online and offline. Today, traditional banking has remained unchanging and stale, while fintechs have excelled at connecting with customers at various touchpoints.

Traditional institutions must make transactions feel frictionless both online and offline with the aid of creative product marketing and reliable technology partners. Depositing a check need to be as simple as scanning a QR code and watching the money show up in a client’s bank account.

Seamless financing of SMEs’ business owners

Small companies are beginning to demand financial services with user interfaces for mobile and web platforms that are as engaging as those for the technology they use personally.

Customers would choose to apply for loans online if the full procedure was done there. Digitization has the ability to significantly lower lending costs at every level of the process, making SMEs clients more profitable for lenders and opening up options to service a wider range of SMEs in addition to enhancing the experience for business owners.

Reduction of transaction charges

Traditional banks charge a price for many financial services, including minimum balance fees, deposit and transfer fees, overdraft fees, and ATM withdrawal fees, ATM maintenance fees, balance checking fees.

There is a fee for almost everything, and these fees can pile up over time if you can’t locate your account. To transfer money to other banks, you also have to pay a fee. You need to maintain a specific minimum balance in some accounts at all times.

These advantages greatly outweigh those of the outdated and shrinking analog banking system, which is increasingly threatened by its digital analogues.

Simplicity in handling customers complaints

Although traditional banks provide face-to-face customer service, they sometimes take longer than online banks to resolve customer complaints. This procedure also necessitates a slew of paperwork and bureaucracy, which can be time-consuming.

Simplicity not only improves the customer experience, resulting in trust and loyalty, but it also reduces operational costs from redundant products, processes, and dealing with customer complaints. However, achieving simplicity is impossible unless organizations lay a solid foundation for sustainability. It is especially true in the banking industry due to changes in legislation, compliance requirements, and technology.

Prompt response and availability

Traditional banks have set office hours and days of operation. This means you can only visit banks during this time.

As a result, if you have a complaint outside of these hours or days, you can only contact their online representatives or wait until the following office day/hour, depending on the services you require.

Traditional banks can only win by putting customers first

Customers anticipate more channels, faster and more personalized responses, and shorter wait times. Customers expect more from their financial institutions than just basic services.

They want insights, guidance, and relevant recommendations. Effective and efficient customer service is essential in the banking industry because it makes customers feel valued, allows you to meet their needs more effectively, and increases overall customer retention.

Read also: Is Metaverse the future of banks?

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