There’s more than one reason that financial technology, or fintech, is here to stay, but perhaps no trend shows this more clearly than the rise of digital banking.
A survey from YouGov, conducted in fall 2020, shows how quickly digital banking has become the go-to banking service for the vast majority of people.
A whopping 89 percent of respondents said they would continue using digital banking services even after the end of the pandemic, “suggesting financial institutions should remain committed to expanding and developing new banking models post the health crisis as well,” according to the article.
Among those already using digital banking, the survey found that 71 percent rated their digital banking experience during Covid-19 as “Excellent” or “Very Good.” YouGov’s research also showed that 77 percent of respondents said they use digital banking services at least once a week, and 30 percent use such services once a day or more.
Even the biggest traditional banks in the world, like JP Morgan Chase and Goldman Sachs, have embraced digital banking services. The quick adoption of this technology has started to transform traditional banks into something like the fintech startups that created the demand in the first place. It’s now clear that online financial services have become crucial to retaining customers and growing revenue.
But digital banking has also become especially valuable to immigrants and minorities.
The Latino community in the US is a perfect example of this, according to Forbes. They represent the fastest-growing group in the US and they have tremendous buying power, but still “face obstacles to financial inclusion.”
Nearly half of Latino households are unbanked or underbanked, with few options except alternative financial services that often come with exorbitant interest rates. The son of immigrants himself, Amir Hemmat saw this as an opportunity launching a startup called Welcome Technologies dedicated to providing digital banking services to this community.
“As a company, we think about the opportunity to build a better system for immigrants. That is our north star. We think the starting point around that is a digital wallet that helps to influence transactional decisions more effectively,” Hemmat said in the Forbes article.
Another report on fintech, this one from KPMG called “Pulse of Fintech,” identified important trends in the industry over the last 12 months, including the rise in digital adoption through stronger demand for e-payments solutions and contactless banking services.
“The global pandemic has only enhanced interest in the payments space given the rapid acceleration of digital trends and demand for alternative payments models, driving activity in the challenger banking space and in the B2B sector,” the report said.
Customer preferences have suddenly shifted with the adoption of e-commerce platforms, digital customer-service channels and e-wallets.
None of this is surprising to those who have been paying attention, said Bardya Ziaian, a Canadian entrepreneur within the fintech industry and current CEO of Sittu Group.
Online banking isn’t just checking and savings accounts and daily withdrawals anymore, he said. It now encompasses a huge range of services, from remote account openings to getting a loan to new insurance subscriptions.
Not only is this more convenient for everyone, but it also has advantages for historically disadvantaged groups of people that have trouble getting loans in traditional banks.
“I think the reality is that traditional banks haven’t done a very good job using technology to improve customer service and bring it into the 21st century,” Ziaian said. “But fintech services and companies are forcing the change.”
Yet many banks continue to lag behind.
In the YouGov survey, 31 percent of respondents said that their bank is “weak” in providing seamless access to online banking services.
But if the above numbers are any indication, banks that don’t adapt to the new normal of digital banking might not survive in the world of finance being remade by financial technology.