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In a fresh report about the UK banking industry and its future, FinTech companies were identified as number one potential threats to the conventional banking institutions. The main actors of the banking space view innovative start-ups that continue to emerge as agents that can have a negative influence on their business models that have been around for a while now.
The main goal of the report was to explore the attitudes towards newcomers in the banking sphere, and assess the extent to which traditional banks fear that FinTechs will turn to be more appealing and convenient to the customers. As the collected data shows, 81 percent of those participating in the survey agree with the idea that user experience along with the quality of the services provided are key factors that influence the decision of consumers, as opposed to the trust in well-known institutions and brands. In fact, a number of people engaged in the British banking sphere believe that FinTechs also have an advantage in terms of a more direct and personal contact with the customers. Therefore, if fundamental changes will not be adapted by the existing system, it may be expected that a large part of the customer base will give their preference to FinTechs in the near future. It is difficult to imagine a scenario when such changes would be implemented “painlessly”, as significant resources are needed in order to upgrade the approach that traditional banks have. However, the results could be quite promising, making them worth all the efforts.
About fifty-nine percent of the bankers that became subjects of the survey think of FinTechs as a threat to their customer relationships. Digitalization is rapidly conquering the world, leaving conventional organizations out of the peoples’ attention, making them instead focus on the mainstream tendencies and trends. Personalized experience is currently a priority for every modern company and start-up, and so are the affordable prices and 24/7 customer support. For banks, though, it can be quite a challenge to reach a sound balance between the three. You would think the latter are having a hard time acknowledging their drawbacks, but instead 71 percent of survey participants confirmed that banks’ brand messaging has taken a different direction from what consumers are actually looking for, which is speed, simplicity and convenience.
For now, there are no specific projections on the way FinTechs will transform the existing banking environment. It may go both ways: the influence of innovators might be highly beneficial and facilitate transformations, while it might also lead to the complete extinction of banks in their traditional form.
In any case, only time will support or disprove the projections experts and industry’s actors are currently making. Either way, groundbreaking changes are right around the corner and FinTechs will doubtlessly lead the play.