Skip to main content
HomeThe Web Writer Spotlight

- News, tips, inspiration you can trust to thrive in today’s digital age.

Search form

Main menu

  • Home
  • News & Features
  • Business & Economy
  • Tech & Trends
  • Health & Style
  • Arts & Culture
  • Contact Us
 

Can FinTech Startups Replace Banks?

Joy Anderson April 16, 2022

joy-anderson.jpg  Tech enthusiast and a hardcore Fortnite Gamer.

  WWS contributor

hor-z.png

Traditional banks and fintech startups are better off coming together rather than competing against each other in the market. But...

man-using-smartphone-near-buildings-fintech-repalce-banks

In the last few decades, there has been notable growth in the financial sector. The evolution of technology has drastically improved the way financial institutions used to work and the way financial procedures and services are carried out.

The integration of finance and technology has created a huge impact on financial aspects like banking, investment, trading, cryptocurrency, and many more. This combination has given popularity to a new term, Fintech.

In this article, we shed some light on fintech and its impact on traditional banking, especially addressing the question: Will fintech replace banks?

 

What Is Fintech?

 

Fintech is short for financial technology. It is not just a term referring to a certain kind of technology, but rather the whole spectrum of tech innovations that have significantly changed the traditional ways of providing financial services.

With the help of fintech and the latest tech innovations, more effective financial solutions and services are developed and rendered. For example, banking software and mobile banking apps are some examples of financial technology development making a big impact.

So, you may wonder, how do banks implement fintech to improve their services and better comply with regulatory requirements?

fintech_financial_technology_icon_over_smartphone_8b461bdfe0_b.jpg

 

How Banks Implement Financial Technology

 

Banks have been laden with stringent financial regulations at least since the financial crisis of 2008. They must comply with regulatory standards to avoid legal penalties or paying hefty fees.

Although most financial regulations address traditional banks, the regulations also need to apply to or be adapted for digital banking practices too since the world is growing more and more dependent on digital solutions. As such, traditional banks find they could be at risk of being out of compliance should they wholly ignore digital banking.

Banks that digitize regulatory risk management processes, save money, time, and resources, while also achieving far better accuracy than traditional finance processes thanks to adoption of a derivative of fintech called regulatory technology (RegTech).

RegTech is simply a technology that allows firms to simplify the process of regulatory requirements and easily adapt to the pressure of increasing regulatory reporting, while at the same time being cost-effective and secure.

With RegTech, banks and other firms can apply the Know Your Customer Rule (KYC), which requires every broker-dealer to apply reasonable verification efforts when opening and maintaining client accounts to minimize illegal activities like money laundering.

While RegTech, part of the broader financial technology, is still growing, it helps with anti-money laundering and can also detect fraud. You can expect more solutions coming into the financial services industry with this technology to address more complex problems.  

Also, digital transformation is beneficial to traditional banks as far as financial regulation is concerned by blending technology with risk management processes.

So, can fintech startups driving all this technological innovations in financial and banking processes grow and eventually replace traditional banks?

personal-banking-jonathan-cooper-0o2pp6-moky.jpg

 

FinTech Startups vs Traditional Banks

 

The financial industry is being disrupted significantly by fintech startups and other innovations happening all around us.

People have warmed up to new ways of banking that are more attuned to the current times, and fintech startups have stepped up to bring many advantages into the industry. This gives them a marked upper hand in the sector and industry.

Today, fintech startups are able to bring more innovative solutions and deliver cost-effective but quality services to customers compared to traditional banking institutions. This has left people wondering whether fintech is going to replace traditional banks in the future?

For a number of reasons, it is most doubtful that fintech startups will replace traditional banks and banking services any time soon. The very first reason for this is because most consumers still trust banks over any startup responsible for handling the safety and security of their money. Banks have spent decades building that level of trust, so fintech startups may need to be a bit more patient to win over customers’ trust.

Another important factor to consider is the nature and exchange that takes place between banks and fintech startups when partnering with each other. Oftentimes, the ways these two players partner with each other involve mergers and acquisition of fintech startups, or mentorship programs where banks gain valuable insights and innovative technologies, while fintech startups could gain customer trust and market reach.

In short, it’s safe to say that at this time, both traditional banks and fintech startups would benefit by coming together rather than competing against each other in the market.

So, how can players in the financial sector transition from old, legacy systems to new, more modern and innovative financial technology solutions that’ll enable them to stay competitive?

 

Tips to Adopt Modern FinTech Systems and Solutions

 

One of the biggest challenges that traditional banks face while adapting new technologies is to figure out how to make a transition from old legacy banking systems that they have been using for decades on which every operation relied on.

Technologies evolve as the years go by and banks often have trouble adapting and replacing their legacy systems that can be incredibly complex. Think of it as a task in which you have to remove a brick from the foundation of the house without disturbing the entire structure that the brick is supporting. It’s difficult and the challenge is real and complex. 

In this challenge of implementing new financial technology, there are few options banks and other companies can consider. One of them is to launch a front-end app for the customers as it offers a simple and user-friendly interface that enables the banks to stay relevant in the market. This option is a quick fix for the situation as you take time to develop or make ample changes in the back-end in a strategic and calculated manner and at a slower pace.

The second option for the banks and other firms in the financial sector is to dedicate a team to maintain existing legacy system and another team to develop and deploy new fintech systems. But remember that both teams need to be in sync and work in harmony.

Ultimately, you need to take on every upgrade operation one step at a time and implement robust fintech systems that enhance your existing operations. This way you’ll meet current market standards and high expectations for continued success in the modern world.


Joy Anderson is a tech enthusiast and a hardcore Fortnite Gamer. When is not playing games you will see him writing and exploring some technical stuff on the Internet. He is also a part of various development communities and is an active member.


 

Related stories

 

Why Every Executive at This Fintech Holds Two Job Titles

The Various Applications of Machine Learning in Finance

Money Laundering Red Flags to Watch Out for in Your Business

Fastest Growing Industries that Benefited from COVID-19  (Hint: FinTech Is Included)

Emerging Cities Are Taking on Established Hubs for Graduates Seeking Careers in Finance

 

Share this article

  • facebook
  • twitter
  • linkedin
  • pinterest
  • pocket
  • email
  • hackernews
  • reddit
  • tumblr
  • whatsapp

bg_carousel_header_0.png

SUBSCRIBE TO OUR NEWSLETTER  newsletter icon.png

Get our best content, news, tips, and inspiration in your inbox free.

No spam. Just great stories. Promise!

 

Join Over 20,000 Subscribers!

Get our best content, tips, and inspiration free in your inbox. Subscribe ››

Connect with us:  twitter.gif linkedin-gray.jpg email.gif RSS feed

 

 

 

 

 

 

Most read this week


young-woman-influencer-urban-area-city-taking-selfie
Do You Trust Social Media Influencers?
George Mathews

Inbound Email Marketing Tips and Tricks Wikipedia Won't Tell You
Kevin George

Image for Best Mac Cleaners to Easily Achieve a Clean and Superfast Mac
Best Mac Cleaners for a Clean and Superfast Mac
Ella Brown

Image for New Year’s Manifestations Are the New Resolutions
New Year’s Manifestations Are the New Resolutions
Caitlin Purvis

 

Got a story or tip for us?

 

Tips_0_0_0.png

Here's how to submit it →

 

 

 
 

Latest stories


Do You Trust Social Media Influencers?

George Mathews December 9, 2023
SOCIAL MEDIA INFLUENCERS
young-woman-influencer-urban-area-city-taking-selfie

Influencer marketing has seen a meteoric rise over the years, but do you trust influencers? Who's actually paying attention to influencer social media postings and placements?

Why People Are Embracing the Uniqueness of Gifts Hampers

Alexis Davis December 8, 2023
GIFTS & HAMPERS
woman-wrapping-personalized-gift-hamper Image for Why More People Embrace the Uniqueness of Gifts Hampers

Nothing speaks of thoughtfulness, love, and care quite like a gift hamper that’s personalized for the recipient and the particular occasion or situation they are in.

How Online Business Registration Helps You Save Time & Money

Amelia Whitlock December 7, 2023
BUSSINESS REGISTRATION
Online Business Registration
When it comes to business registrations, the days of using a pen and paper are gone. Online company registration provide many benefits that offer ways to save both time and money.

How (and Why) to Create a Business Continuity Plan

Gaetano DiNardi December 7, 2023
BUSINESS PLAN
man-suite-standing-laptop-business-plan

A business continuity plan is essential in case of an emergency, especially as businesses rely more on digital communication and operations.

How Unique Product Packaging Shapes Influence Sales

David Harrison December 6, 2023
PRODUCT PACKAGING SHAPES
distinct-unique-product-packaging-shapes-influence-sales
People are psychological fascinated by unique shapes and sizes. You can leverage shapes when packaging business products and gifts items to increase sales.

Most People Commit to New Year Resolutions for Only a Few Weeks

Alexis Davis December 6, 2023
NEW YEAR GOALS
pen-paper-new-year-goals
Millions of people around the world start off the year with a commitment to new year's resolution. However, research shows most people stick to their New Year goals and commitments for only a few weeks.

Key Tips for a Cyber Secure Christmas for Online Businesses

George Mathews December 5, 2023
HOLIDAY CYBER SECURITY
laptop and shopping cart online business cyber secure christmas
With Christmas period being particularly busy for online businesses, eCommerce businesses should be on guard against cyber criminals who are more likely to attempt cyber attacks.

Pagination

  • (Page 1)
  • Next page Next ›

Contributors blogs


Blog here »

In the Wake of COVID-19, Generation X May Be the 'Business Boomers'

James Lester

 


Credit Cards Misconception You Should Ignore

Akhil Singh Rawat

 


woman-laptop-attending-virtual-event-conference-with-video

10 Awesome Ideas for Your Next Virtual Event

Lisa Schulteis

 


The Best Strategies People Are Using to Successfully Work Remotely

Andrew Tillery

 


woman-projected-data-concept

Data Cleansing Framework to Avoid Wasting Resources on Dirty Data

Brown Walsh

 


couple-real-estate-agent-solid-team

How to Build a Strong Real Estate Team: Tips & Best Practices

Michael Zhou

 


Ground Rules for When You Live With Someone Who Works from Home

Leda Marritz

 


Like this content? Subscribe for updates!

No spam. Just great stories. Promise!
 

Home | About Us | Write for Us | Contributors | Advertise | Disclosure | Privacy Policy | Contact Us

Follow Us:

twitter_e.jpg linkedin-pg.jpg email-updates_icon.jpg

© 2023 Copyright, The Web Writer Spotlight.

Committed to quality content and journalistic ethics.

RSS rss

Search WWS search-icon-trans_0_1.png

Webwriterspotlight.com. All rights reserved.