To continue being competitive, traditional banking must assume the relevant changes that the new technology presents, addressing a unique and personalized approach to customers and products. Traditional banks must be prepared to operate in a multi-platform and multi-channel environment, in addition to creating value and solving current problems for their users. This article will talk about how traditional banks must face the disruption of Fintech and Startups.
Digital disruption, driven by technology, has application in many areas of life, with business models that “break the norm” in many industries, for example, retail, travel, health, and wellness in general, and for example. Of course, financial services, where it has achieved greater influence. Traditional banks serve various clients, from retailers, small, medium, and large companies, and multinational and financial companies. Banks serve many purposes; they provide different functionalities to clients and the economy in general, granting credit, liquidity, execution of transactions, market creation, risk management, and advice and building a solid relationship with the client. With the advancement of technology, customers expect to receive personalized, innovative, and improved products from their banks, in addition to having a greater user experience and better online service.
Given the number of services and products that banks provide to their clients, being able to innovate, personalize, and meet their clients’ expectations make up a challenge, often requiring investing in technology or new tools, especially due to the rise of Fintech and Startups.
The challenge of traditional Banks
Whether small or large, banks must decisively address three “key challenges” to compete with Fintech and Startups: new product development, technology, and customer relations. Banks must be clear about what they are and what they want to be, depending on the different segments of the economy and their role in future trade, aligned with their strategic objectives, competitive advantages, and added value. That contributes to the economy; the main challenge is to meet the needs of its clients in an environment where the online standard and quality are compared with other technological platforms of daily use such as social networks and e-commerce sites, where the user experience is the point most notably.
This is an area in which some traditional banks are behind; currently, traditional banks cannot continue with the same technology and products from years ago, such as checking accounts, checks, credit cards, loans, and mortgages; this is because the lifestyle and needs of the client have changed. Banks must innovate by providing new products and solutions to the market.
Legacy technology was not created to innovate; it was not designed to be personalized, adaptable to the way we do business today. Fintech companies have an advantage; they use advanced technology developed in the cloud, adaptable, customizable, and easily connected to other services through applications. For this reason, traditional banks need to modernize their technological architecture, creating modular solutions of customized and adapted products; they must be open to the use of third parties. Your technology must be able to integrate with other emerging technologies. The big problem for many banks is that they try to adapt old technology with modern technology, which does not pay off in the long term.
Relationship with the client
Currently, the client expects to interact with his bank in the most natural, quick, and easy way, besides being able to access the services within the ecosystem and get personalized solutions; for banks to achieve their objectives and position their financial services, they must be open to executing operations that address the needs of the market on a larger scale, adding value and being able to retain their customers.
What do you think about this topic? What do you think the response of banks should be in the new technological era?
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