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How Fintech Impacts Banking



Financial markets have seen a huge shift with the development of technologies. What we know as fintech comes from financial services and digital technology and comprises three main directions:

1. Young companies operating on the financial market that offer improved services and products;

2. Technology companies that develop innovative solutions for the finance market using their own resources and funding and

3. Software-based activity that satisfies the financial market demand for products and services.

As retail customers, we were able to see the way fintech impacts banking in many ways in the past years. It started with the global financial crisis of 2008 that compromised the trust towards banks and highlighted the weak points of the traditional banking system. Customers’ expectations grew and required a quicker, more technological and convenient way of doing banking operations. 

Customers no longer come to the banks; the banks come to their customers instead. Neobanks shifted the focus from operations to people. Globally present, paperless, contactless and intangible – those are simple but very powerful features of the future banking, and that future banking is fintech-based. 

Let us have a look at the ways that fintech impacts the banking sector.

  1. Big data and cloud technologies

Big data analyses large volumes of digital information that come from various sources and helps banks to provide customers with personal offers based on that analysis. Cloud technologies allow accessing data anywhere in the world without the need to use additional application and enable banks to centralise their services on the network and create smooth interaction with the clients. 

  1. API

API (Application Programming Interface) is a software that is integrated into clients’ interaction systems and helps banks to provide digital services through acting as an interface between various applications. API improves data sharing, systems integration and service personalisation making financial services more efficient. 

  1. Social media and mobile communication

The way banking integrated with social media enabled obtaining customer preferences based on their activity and offering products that match those preferences. This helps to improve customer relationships with service providers and accelerates application of the blockchain technologies related to customers. Two good examples of such implementation are Deutsche Bank and Amazon.

  1. Omnichannel banking

Omnichannel banking allows receiving the same set of banking services whether online or offline. Websites, applications, call centres or traditional bank branches offer the same scope of services to their customers. Online banking with its digital tools is obviously a much faster way to resolve customer enquiries and avoid physical interaction. For the banks, it is a great way to optimise costs and give more personalised services that increase customer loyalty.

  1. AI and voice-activation 

AI (Artificial Intelligence) has spread onto the payment systems and now can analyse customers’ transaction history, consumer behaviour, predict future activity and suggest alternative payment methods offering reduced fees.  

Voice-activation transaction software is a very popular solution in banking due to its increased security. Voice is a unique feature like fingerprints or iris and serves as a reliable authentication technique. This technology receives significant investments as it appears to be an alternative secure way to access data and carry out transactions remotely.  

  1. Open banking

Open banking is a mechanism of sharing banking information with the accredited parties securely. This happens with customer’s consent only and enables companies to offer financial products and services strictly based on customers’ financial situation. At the same time, customers can get a clear picture of where they stand with their finances. 

The development of technologies promoted changes in customers’ banking behaviour. With the increased use of mobile banking, online services and enhanced security measures traditional banking is believed to be soon replaced with fintech. However, despite these fears, there are reasons to assume that banking and fintech industries work towards cooperation for the sake of mutual benefits. A good example of such cooperation is Baltic International Bank that uses services of fintech companies. Assessing risks of financial crime and management efficiency through advanced technological approaches helps the bank to gain a new level of service quality.

We see fintech as an opportunity that can contribute greatly to the traditional banking through enhanced intelligent data analysis and more efficient data use. After all, data is one of the most valuable assets known to date.


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