Are fintechs a threat to banks?

When it comes to financial technology’s (fintech) threat to banks, there’s no doubt that fintechs and banks are increasingly competing against each other. Like London buses, one comes along (and takes over the world), then a while later another one comes along and takes over the world — only to be replaced itself by another one.

The fintechs are waiting in the wings, very much like those London buses: Barclays and HSBC have been taken over by them; Lloyds and RBS will be next. The incursion of these fintech companies into banking territory is quite clearly here for good.

The fintech threat

Fintech companies can be a threat to banks, but they may also provide banks with opportunities. Fintech companies are often viewed as a threat to traditional financial institutions because they have attracted millions of customers, raised billions of dollars in funding and offer innovative products and services. As fintech companies grow, they are becoming more like banks themselves.

They have started offering traditional banking services such as checking accounts and savings accounts for their customers. Fintechs have also begun to disrupt the financial services industry by creating new markets and niches that were previously unavailable to consumers. For example, many fintech startups offer peer-to-peer lending services that allow people to borrow money from other individuals instead of going through a bank or credit union.

Banks should take advantage of this opportunity by partnering with fintechs rather than trying to compete against them. By collaborating with fintechs, banks can gain access to new markets while reducing the cost of doing business.

Are fintech companies a threat to banks or financial institutions?

Many people believe that fintech companies are a threat to traditional banks and financial institutions. This is because they provide a lot of services that banks can't or don't want to provide. Many fintech companies have built their businesses around the concept of providing financial services to customers through technology and innovative methods.

Fintech companies are able to offer competitive rates and fees because they do not have the same overhead costs as banks. Fintech companies also provide a level of convenience that many banks cannot match by offering 24/7 customer service, online banking, mobile apps, etc. This gives customers greater access to their accounts at all times of day and night.

In addition, some fintech companies offer more personalized service than traditional banks do because their employees are often younger with an entrepreneurial spirit who want to earn your business each and every day by offering you value-added services like credit cards with rewards programs or low interest rates on loans that traditional banks can't offer due to regulatory requirements.

Fintechs and traditional banks can complement each other

One of the most common questions that I get is: Are fintechs a threat to banks? The answer is yes and no. It's not an either/or situation. Fintechs and traditional banks can complement each other and create opportunities for both sides. Let me explain. First, fintech companies provide the technology that enables financial transactions and banking services to take place more efficiently and cost-effectively than ever before.

They do this by making use of new technologies such as cloud computing, artificial intelligence (AI), machine learning, blockchain and so on. This means that fintechs have a strong competitive advantage over traditional banks when it comes to providing digital products and services. Second, fintech companies are more innovative than traditional banks because they don't have the same constraints as their counterparts do — such as heavy regulation or strict compliance requirements — which means they can move faster in developing new products and services for customers.

Fintech companies are all about helping the end-user get simpler services.

In a world where fintech companies are a threat to banks, it is important to look at what the future holds for this sector. It is true that these startups are going to put pressure on banks and financial institutions but it is also true that they will help them grow in the long run.

The truth is that fintech companies are all about helping the end-user get simpler services. They have made it possible for people to get access to banking facilities without having to go through the hassle of dealing with a bank. If you consider how many people use fintech companies today, then you can see how big this industry has become.

In fact, more than half of all millennials use these services on a regular basis and this number continues to grow each year.

All in All...

As a brief overview of this topic, it's important to note that fintech companies are becoming a threat to traditional banks on three fronts. One, consumers are becoming more comfortable with the idea of managing their financial assets and information online, which makes them more likely to shift over to fintech companies.

Two, fintech can offer banking services—like credit cards or international money transfers—for cheaper than banks (because they operate online). Three, because they aren't beholden to the same regulatory structure as traditional banks, they can more easily launch new services without significant time and money investments.