Dear all,
I would like to introduce to you to very interesting topic - financial
technologies called FinTechs. The financial technology (fintech) industry is
thriving globally and received $17.4 billion in investment last year
alone.
Few examples:
- Probably You have heard
about the Revolut card so far. This is one of the most popular examples of
FinTechs. Digital banking alternatives, multicurrency cards, travel
insurance, cryptocurrency market, money exchange, concierge and much more
in one place.
- SoFi - the company provides
refinancing of student loans, mortgages and personal loans. Credit
mortgages of the company ignore the assessment of creditworthiness.
- Robinood is an application
for smartphones that allows you to invest in listed companies and stock
exchange funds listed on the American stock exchanges without paying
commissions.
- Because of the difficulty in
obtaining bank loans, Kabbage decided to grant loans to small businesses
and consumers via an automated loan platform.
- Commonbond - Getting cheap student loans is a real problem. Commonbond decided to change it. This is a lender on the market, which reduces the cost of student loans for borrowers by financing them with bonds. Thanks to this, the repayment of liabilities can be postponed in time, while reducing the costs of these loans. According to Commonbond calculations, students can save over USD 14,000 compared to traditional student loans.
These are just a few examples of FinTechs, whose common feature is to offer
everything that we cannot get or settle in traditional banks. For traditional
banks modern client is a huge challenge. They invested enormous financial
resources in IT systems, which were often obsolete at the time of installation.
At best, they created a substitute for FinTech, or solutions based on the
so-called e-banking. However, this is only a supplement to the offer, not the
essence of the activity. Only institutions that have built their business
around modern technology are able to function on this dynamic market.
In Silicon Valley, work is underway on algorithms that provide credit based on
our search engine queries. We will be informed that it is available
immediately, on certain financing principles. The decision on the loan will
take place at the algorithm level: the search engine asks our bank, the bank
will automatically check the creditworthiness and send an offer. Customers
received what they were looking for: better prices, not only lower, but more
reliable and risk-free.
QUESTIONS TO ANSWER:
- Will the traditional stationary branches of banks exist in a few years or people completely give up and use FinTechs equivalents?
- Is there still room for new methods with such a wide range of alternative payment methods?
- If today FinTechs already offers a much lower interest rate on loans, lower spread on exchange of currencies, lack of fees for an account or multi-currency cards, how in the near future they will compete with each other?
SOURCES:
Thank you for an interesting article and topic.
ReplyDelete1. Will the traditional stationary branches of banks exist in a few years or people completely give up and use FinTechs equivalents?
Already, fewer and fewer people use traditional banks. When you had more cash in your wallet last time? Some more and traditional banks will go to nothing. Today, we pay by card, by phone, almost no one uses checks. We submit applications for granting credit via the internet. I think that traditional banking service will soon be over.
2. Is there still room for new methods with such a wide range of alternative payment methods?
For sure! We used to pay goods for goods. Then money was invented. Then checks, cards, transfers. Today, contactless payments, telephone etc. Someone will develop some new payment methods in the near future and implement them for functioning.
3. If today FinTechs already offers a much lower interest rate on loans, lower spread on exchange of currencies, lack of fees for an account or multi-currency cards, how in the near future they will compete with each other?
Hard to say. However, financial institutions must earn. It is known that deposits have a lower interest rate than loans and that is the main source of income as of today, but there must also be some income from other operations. Slowly, we do not pay for anything. Free ATMs, operations, everything is slowly becoming free. On the other hand, ZUS contributions are growing. Something will come up ...
Thank You for a comment. I agree with You that there is more and more customers of fintechs, but still so many of traditional banks especially those from older generations. I can't imagine those grandpas and grandmas using Blik or Google Pay... Still when I go to post office so many people pay money transfers or bills there.
DeleteI know that they earn by taking some percentage from recipients, so there is a room for them to earn, also they have always some premium offers that we have to pay for, but still it is not much. My concern is whether they will offer a really secure and great services in a long term.
I think there is no real version of "risk-free" in the financial world. Corporate bonds were had been hyped recently, until GetBack happened.
ReplyDelete1 Will the traditional stationary branches of banks exist in a few years or people completely give up and use FinTechs equivalents?
I don't know if it's a matter of a few years, but the trend to move away from cash, and other traditional forms of finance is definitely there. I was surprised by my collegue of same age, who turned cashless (we were running a whip-round for a gift to another friend about to leave the company).
2 Is there still room for new methods with such a wide range of alternative payment methods?
Probably yes, especially because not all the new technologies catch on. And also - some of the ideas only succeed after being rehashed a few times.
3 If today FinTechs already offers a much lower interest rate on loans, lower spread on exchange of currencies, lack of fees for an account or multi-currency cards, how in the near future they will compete with each other?
This is worrisome, because many of these ideas have disruptive potential. So it can happen as it went down with google - first a completely new level of search (or maybe just fast enough and lightweight, and coming as an underdog against giants like Yahoo and AltaVista), then a solid monopoly. We could have asked then "how will (the search company) compete, if it already gives the service for free?". Well, companies like that can sometimes invent new ways of making money of their customers. One of them is, when someone thinking of themselves as a customer is actually the product.
Thank You for a comment. That's absolutely true, but still when offer seems too good too be true, it probably is a scam, but people seems to be very naive and opt for it.
DeleteI personally do not like cash, I know from my experience that it is much more likely to get ripped off or stolen when you have cash. Still we look at Europe and USA and see this cashless trend, but when you go to Asia or Africa it is a completely different story.
As I said in comment above, I just worry that even the biggest players might have problems and how we can actually feel secure that our money will not disappear.
1. Will the traditional stationary branches of banks exist in a few years or people completely give up and use FinTechs equivalents?
ReplyDeleteI think yes, but more like office for the employees than common (many) customer service stand. Traditional payment method goes down in history. Now only a little group of people using cash because the electronic payment methods are more comfortable.
2. Is there still room for new methods with such a wide range of alternative payment methods?
For sure ;)
But to be honest nowadays is so many ways of payment method that I don't have the foggiest idea how could be the next "revolution" in payment method...
3. If today FinTechs already offers a much lower interest rate on loans, lower spread on exchange of currencies, lack of fees for an account or multi-currency cards, how in the near future they will compete with each other?
I see only one possibilities. To give people full free services (all of them), but them I will be worry about their quality.
I wouldn't say it is a little group, but it gets smaller. I think that bank branches will be closed, but can we only rely on virtual consultants and solve all problems by email?
DeleteHence my question, there are so many different methods, some for me not entirely sensible or already overlapping with others.
1. Will the traditional stationary branches of banks exist in a few years or people completely give up and use FinTechs equivalents?
ReplyDeleteI think this is inevitable. Branches of banks will not disappear altogether, but there will be fewer and fewer of them, because already now, even in traditional banks, most of the things can be done over the Internet.
2. Is there still room for new methods with such a wide range of alternative payment methods?
As the example of Revolut, which is taking our market by storm, shows, I think that people are able to change their payment habits as long as they are more convenient and cheaper. I also know that our Polish market is very developed and susceptible to novelties, I do not know what the situation in other countries looks like.
3. If today FinTechs already offers a much lower interest rate on loans, lower spread on exchange of currencies, lack of fees for an account or multi-currency cards, how in the near future they will compete with each other?
Fintechs offers a variety of services such as insurance, concierge service and access to the airport lounge. I think that it is the availability of additional services and their price that will compete with each other.
Will not the quality of services suffer in this case? if I need to get a service quickly, or for a very large amount, I feel much safer going to the branch. the same with the complaints, we all know how fatal the phone service looks like and on such a delicate topic as finance it can be difficult to get rid of branches.
DeleteI think that the USA is a good example where, as everyone knows, they are moving forward in every field. I still hope that I will be able to provide the data for the transfer without disclosing my details like the address and maybe even my first or last name.
I didn't think about it because I didn't have the opportunity to experience any problems of this kind. In my case I don't remember when I had to do something in the stationary branch of the bank.
DeleteBanks shouldn't disappear in a foreseeable future. There is still a lot of trust involved in financial operations. Having a stationary store is important factor in perceived trustworthiness regardless certificates issued by any regulator. Personally I'm fan of the Revolut, but I wouldn't deposit there any larger amount of money.
ReplyDeleteRegarding payment methods I think that biometrics is still unexplored area. Currently we need some device or card to make payments.
Companies may offer some additional benefits like discounts for products of cooperating partners etc. I think it'll be pretty much the same as for any other businesses.
for example, would banking for businesses be safe if there were no branches?
DeleteJust the use of chips, as in Scandinavia, is another possible way of the revolution.
Is it possible to create an international network like "Goodie"?
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ReplyDeleteThis comment has been removed by the author.
ReplyDelete1. Will the traditional stationary branches of banks exist in a few years or people completely give up and use FinTechs equivalents?
ReplyDeleteIn my opinion the traditional stationary branches of banks will exist in the future at least in a few years. Nowadays FinTechs is going to be more and more popular especially in USA and Western Europe but I think it is still not enough to give up the traditional banks. The elderly people usually use cash instead of electronic ways of finalizing transactions. Even some of my friends go to the post office to pay bills or do not want to buy a train ticket online. When I travel across the USA and Europe I also sometimes see the sentence like „ Only cash up to 10$ or 10 euro”. It seems that the world is not prepared to give up the traditional banks and way of paying.
2. Is there still room for new methods with such a wide range of alternative payment methods?
Nowadays, there are a lot of payment methods but I think that the world is developing all the time so it is possible that the new methods will appear. I think that the biometry is the wide field to develop and apply in creating the new payment method. Maybe, we will be able to pay using our EEG signals or the system will be able to recognize the person who wants to pay. I am not sure when it could be able to appear but I think it is possible.
3. If today FinTechs already offers a much lower interest rate on loans, lower spread on exchange of currencies, lack of fees for an account or multi-currency cards, how in the near future they will compete with each other?
In my opinion the FinTechs company will have to offer the additional benefits of their service to have higher number of users. On the other hand, if there are more than one company which does the same, it means that the companies will have to take care of clients, competing with each other. They will have to be modern and more flexible in order to meet the customer’s expectations. If they do not perform the mentioned activities and if the user is dissatisfied he will try the products of some other FinTechs company.
While in fact in Europe and the USA online banking is very popular, in Asia, branches of banks are multiplying at a huge pace and it can be seen that between new and disintegrating buildings new, very modern and expensive new bank offices are being built.
DeleteYour idea in EEG is a great idea, if it would be possible to unequivocally assess whether a given person is not forced to perform a given transaction and whether it is definitely the owner.
1. Will the traditional stationary branches of banks exist in a few years or people completely give up and use FinTechs equivalents?
ReplyDeleteAs people are more tech savvy I think digitalization will take over stationary branches and pull in automated service desks. But I disagree that people will completly give up and head for FinTechs equivalents as still megabanks run the world and they will absorb thos fintechs with biggest potential.
2. Is there still room for new methods with such a wide range of alternative payment methods?
Technology is growing with so fast pace that we can not even imagine how this room is big.
3. If today FinTechs already offers a much lower interest rate on loans, lower spread on exchange of currencies, lack of fees for an account or multi-currency cards, how in the near future they will compete with each other?
In my opinion this is very risky playground, if they will be competing with low rates instead features, scalability and security they will losse at the beginning. Their profit is some percentage from their rates.
I am worried about the future of technology if we take into account very tightening rules, which in addition are very different in individual countries or unifies. Still, revolut does not work in some countries that seem to be very developed. I have not encountered a solution that would actually offer a whole range of currencies.
DeleteAd.1
ReplyDeleteI believe that stationary banking will slowly disappear. But this will only apply to account and customer service. The first and most important factor for the bank is costs. But for users it also has a lot of advantages.
Availability on-line, i.e. 24 hours a day. Online banks available without any time limits are a "deliverance" especially for professional workers (usually in the same hours as banks), because without leaving the workplace they can meet their financial obligations in a timely manner.
Low costs of maintaining accounts and performing operations. Internet usage is a huge reduction of transaction costs.
Eliminate queues, physical contact with staff and save time associated with a visit to the bank. Settling a matter in a traditional bank is connected with the need to fill in a certain number of forms, going to the bank, often waiting in a queue. In the case of Internet banking, such an operation is commissioned without leaving home, not at home. There are no territorial restrictions on access to services. The fact that the browser accesses the account via the Internet WWW service practically breaks the territorial dependence of the customer and the bank.However, I believe that the service will behave in order to sell new services. Research has shown that the best way to heat services face to face
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Some banks like Citi are moving away from individual clients and focusing on companies, I think that this type of division will be more and more visible. Whether after entering the tax on the internet (which will sooner or later be introduced), online banking will look the same. I still think that every bank in its system has a lot to improve, especially when it comes to the panel for clients. If the systems were completely transparent and understandable, online customers would be even more.
DeleteIt seems to me that there are fewer frauds in online payments and you can feel quite safe, sometimes I received phone calls when I made several similar transactions in a row and the bank informed me and made sure that someone did not steal my card.
On the other hand, we see many banks merging into one, many acquisitions.
1.Will the traditional stationary branches of banks exist in a few years or people completely give up and use FinTechs equivalents?
ReplyDeleteI think it will exist because not all people using online banking. They don't trust technology. They like going to stationary branches of bank. FinTech is an interesting option and some people will trust companies which services based on it becouse they don't have time to go to bank for example to get credit.
2. Is there still room for new methods with such a wide range of alternative payment methods?
I think yes. Technology is growing fast. People works to deliver us services that will be easy and comfotable for us. Today a lot of servicses is avaible in interent. I think someone will find method that is better that used today.
3. If today FinTechs already offers a much lower interest rate on loans, lower spread on exchange of currencies, lack of fees for an account or multi-currency cards, how in the near future they will compete with each other?
It's hard to say. People will choose a services that offers much more for lower price. I think additional benefits for using a service are the recipe of success.
I can not imagine that such branches will completely disappear, because there will always be people who will not want to use technology. Not because of lack of skills, but simply lack of will, trust or preferences.
DeleteHowever, sometimes it is worth paying for better, faster or safer service.
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ReplyDelete1. Will the traditional stationary branches of banks exist in a few years or people completely give up and use FinTechs equivalents?
ReplyDeleteI suppose that traditional banking will exist. Otherwise, you would have to remove cash flow, which in my opinion is impossible because of the gray zone. FinTechs assume the possibility of a transaction supervision - unless there is anonymity as in the case of cryptocurrency.
2. Is there still room for new methods with such a wide range of alternative payment methods?
Yes, for sure. It is still unknown what will be discovered. Maybe some new technology will revolutionize the financial market - who knows... Nobody said that we have already reached the limit.
3. If today FinTechs already offers a much lower interest rate on loans, lower spread on exchange of currencies, lack of fees for an account or multi-currency cards, how in the near future they will compete with each other?
Traditional banking still has features that FinTech does not have. For example, access to the currency without knowledge of new technologies. I mean especially older people or technology ignorant people. We can not forget about these groups because they are significant.
I believe that just moving away from cash would give better monitoring of cash flow, especially for the institutions most interested in it. Rather, it would not be possible to counterfeit virtual money, and counterfeiting cash certainly still works.
DeleteOf course, older people are currently not able to cope with technological advances, but just as there are shops without cashiers with artificial intelligence, so it will be possible to manage finances without much effort.
1. More and more people are switching to the use of electronic means of payment. I get caught up in the fact that I use cash less and less often. However, I do not think that stationary branches of banks would cease to exist. It is possible that in large countries, banks' branches will decrease to small branches, but in poorer countries, where not everyone has easy access to payments, fixed-line banks will continue to function. In addition, not everyone trusts electronic payments and prefers to go to the post office or branch to pay their bills.
ReplyDelete2. I think that's how it is. Currently, we have so many websites offering online payments that are difficult to count. With the increased interest in this type of services, more will be created, and the existing ones will improve to attract as many customers as possible. In my opinion, FinTechs is a very interesting option, which has many possibilities. I would love to use one trusted website that offers many functionalities, because now the choice of an online payment site depends on the website on which it buys something and the agreement signed between these companies.
3. It's hard to say. The first thing that comes to mind is that all functionalities would have to be available for free. Unfortunately, any type of bank, whether it is stationed or electronic must somehow earn money on its clients, so it all depends on the commission of the bank. Banks also earn like all other websites on displaying ads on their websites. The more customers, the better it goes. There is also a question of quality and trust, some people are attached to certain banks because of their quality of service, even if they would pay a little more for services than for competitors. Maybe FinTechs will become a monopolist in this field because it will be unrivaled?
Personally, I think that money as cash should disappear and feel more secure paying virtually. Obviously, looking at numbers instead of holding money requires a slight change of approach.
DeleteI think that with more customers, services can just get worse, not better. I was surprised that after recommending Revoluta to my friends from the USA, they sent me a screen with information that they were waiting in a queue of several thousands to register.
1. Will the traditional stationary branches of banks exist in a few years or people completely give up and use FinTechs equivalents?
ReplyDeleteYes I think they will still exists. Sometimes it is good to have an option to meet people face to face and explain some misunderstanding in policies etc.
2. Is there still room for new methods with such a wide range of alternative payment methods?
For sure there are plenty of possibilities for new methods or some hybrids of ole ones which are in fact the new ones.
3.If today FinTechs already offers a much lower interest rate on loans, lower spread on exchange of currencies, lack of fees for an account or multi-currency cards, how in the near future they will compete with each other?
They will change their regulations to be more competitive.
It is true that it is hard to imagine the total disappearance of branches of fixed banks. Do you mean any specific hybrid solutions? What are the regulatory changes you are talking about?
Delete1 Will the traditional stationary branches of banks exist in a few years or people completely give up and use FinTechs equivalents?
ReplyDeleteI don't think it's possible to give up stationary branches completely. I see emergence of FinTechs as just a swing of the pendulum. FinTechs look at some aspect of functioning of traditional banks, identify shortcomings, and offer a product that overcomes those shortcomings. But in many cases, those shortcomings are a result of regulations, which were put in place as a response to real problems. So, in my opinion, a handful of FinTechs will survive (those that are truly innovative and well established) while traditional banks will update its offers and slash out the rest.
2 Is there still room for new methods with such a wide range of alternative payment methods?
I think yes. Each payment method can be described by a couple of parameters, like "is it anonymous?" "is it fast?" "does it require an intermediary?" etc. All this parameters can be rehashed at will creating new payment method characteristic, that can be then implemented. Possibilities are endless.
3 If today FinTechs already offers a much lower interest rate on loans, lower spread on exchange of currencies, lack of fees for an account or multi-currency cards, how in the near future they will compete with each other?
If You ask about competition among FinTechs - I don't think they will compete. Digital world is susceptible to monopolies. I think the pie will get sliced and divided among few players, each entrenched in its speciality. As for competition with traditional banks, I'm sure banks will find a way to stay competitive.
It is true that legal regulations are the biggest obstacle to creating truly interesting offers for clients. Still, whether it's about ordinary banking services or the investment offer is frightening. I am curious whether in a few years, traditional banks will still have such a strong position as today.
DeleteOf course, anonymity has its pros and cons, I understand security issues and the fact that in fact such forms are used for fraud, but "decent" citizens have the right to greater anonymity and choice if they want to completely share their data.
1. Will the traditional stationary branches of banks exist in a few years or people completely give up and use FinTechs equivalents?
ReplyDeleteI think it's not possible to completely resign from stationary branches of banks, yet. At least in our country. Many things can be done via Internet, but still some things require our presence and signature. Still, if you need a lot of cash, it's easier to go the branch than to visit 10-20 ATMs to withdraw the whole sum in chunks.
2. Is there still room for new methods with such a wide range of alternative payment methods?
In my opinion, yes. There is always room for improvement and for inventing new solutions and options.
3. If today FinTechs already offers a much lower interest rate on loans, lower spread on exchange of currencies, lack of fees for an account or multi-currency cards, how in the near future they will compete with each other?
I agree with the previous speakers. I don't think they will compete, I think they will cooperate and share the market. They will obviously specialise, so that they don't get in one other's ways all the time.
Of course, I am not talking about it completely abandoning it at this moment, but in the future. It is true that there is a trusted and qualified signature, although personally I am terrified as hopelessly and amateurly it is created. A world-wide, really secure system for signing electronic documents would be useful.
DeleteWill the traditional stationary branches of banks exist in a few years or people completely give up and use FinTechs equivalents?
ReplyDeleteI really don’t think that it would be possible in the foreseeable future to replace stationary banks by FinTechs equivalents. Firstly, some people are not so fond of new technologies and prefer to use traditional methods of taking care of the finances. Than there is the fact that a lot of people don’t trust electronic forms of using the bank account. There are some benefits coming from the stationary banks, such as the possibility of talking to employers from customer service and try to solve problems eye to eye, and not just by the phone or on-line forms. What is more, there is a matter of giving loans or credits - people have more trust in company’s credibility, when there is someone who checks the creditworthiness of potential client. Of course many people will be thrilled if they can get a loan despite of their financial situation, but I am sure that it wouldn’t be the reason for replacement traditional banks.
Is there still room for new methods with such a wide range of alternative payment methods?
There is always room for new methods, as it is in other aspects of life ;) Nowadays development of new technologies are very fast, and there is always someone who can think of other, often better, ways to do something. For example there are some ideas strict from sci - fi movies, like implement some kind of chips to the human body, with which we can than make financial transactions or pay for products. And we must remember - now it is like fantasy, but in the future it may as well be element of everyday life.
If today FinTechs already offers a much lower interest rate on loans, lower spread on exchange of currencies, lack of fees for an account or multi-currency cards, how in the near future they will compete with each other?
In the future they will compete with each other in the same ways as they compete now - by implementing mentioned solutions, modify them, looking for some more attractive offers. One of the easiest way to win the competition is to think of some sort of complementaries or free products for the client, just because he or she decided to choose one company. Then there is a lot of possibilities to change elements like interest rate or currency rate. Also there are other stuffs like for example linking FinTechs and other new electronic accounts with existing bank’s accounts. So to sum up, I wouldn’t be worry that there are some kind of deadlock on solutions, which can attract new clients.
I wonder if the mentality of people will change, in the end there used to be no computers (not so long ago), the writings were written on the machines or by hand, but people would become accustomed to changes in the surrounding reality.
DeletePersonally, I prefer personal conversations rather than telephone calls, I have more confidence and the feeling that the bank cares for me as a client, although there are banks in Poland that do not have branches and I am not impressed with how difficult it is to handle some formalities.
1. Will the traditional stationary branches of banks exist in a few years or people completely give up and use FinTechs equivalents?
ReplyDeleteI think that the traditional branches of banks will be and will stay very well, because it will be the worst thing to persuade people to use FinTechs technology. Because even with such "excellent" cards, people will prefer to go to the branch to settle the matter (out of habit).
2. Is there still room for new methods with such a wide range of alternative payment methods?
There will always be room for new payment methods. Provided they gain the popularity of customers. For us, it is easier to make a choice when we have more options (not too much), because we can then consider the pros and cons. In addition, healthy competition is always well-aimed.
3. If today FinTechs already offers a much lower interest rate on loans, lower spread on exchange of currencies, lack of fees for an account or multi-currency cards, how in the near future they will compete with each other?
They will definitely want to download the customer with vouchers (gifts, free payouts, etc.). With time, there may be one card for everything, because now we have the internet of things and everything is connected to it. However, in order to give money, you need to take it somewhere. So it's a balancing act between who to take and how much, and who to give it to as little as possible, because you have to make money from it.
The habits can be changed, especially if you do not leave your customers to choose, they will be forced to deal with a given solution.
DeleteI believe that there is still no unambiguous leader, such a bank or fintech, that I would recommend to everyone with my hand on my heart. There is something in everybody that bothers me to a large extent, which is why I transfer to other banks from time to time.
Hi Cezary,
ReplyDeletehere are my comments to this interesting topic:
I’ve investigated this issue several months ago, when I received proposal to use such financial platform to exchange currency. The CEO of such company was very reliable and provided me a lot of arguments to use this, but in fact there is a lot of doubts referring to cybersecurity. That’s why I think this is not so easy to forget about traditional methods in this respect. This is not a matter of our conservative minds, but real danger of losing money. As a result I don’t think such revolution is close to us, I rather observe people keeping their savings on foreign accounts or in cash, investing in properties, art, gold, avoiding virtual transactions.
In spite of the facts mentioned above, I believe there is a room for new methods. There is a group of people ready to take some risk and to test them. Like with everything, first and brave people can earn extra money only because they go forward and they are ready to loose. They just play with alternatives, jumping from one to another without fear, just to have fun with that. I’ve met such physician who became the owner of many start-ups. He funds them, and when he gets bored, sells them further.
Like with every business, there must be the idea to stay competitive without unlimited cost cutting. Otherwise this is a short way to disappear from the market. This is a very difficult question, because it is not easy to analyze this new kind of business. Maybe they will be able to combine their specific services with other ones and to offer something wider? For sure, in the nearest future the safety is the issue they should concentrate on and that aspect can increase competitiveness.
BR
Marta