AI and Fintech – Financial Platforms of The Future

Transforming the banking industry.
Traditional to non-traditional banks.

We’ve seen how applications like Amazon and WeChat have changed the landscape when it comes to banking on the daily and reaching out to a different generation of banking customers. What the banking industry and many experts have realized over time is that the future of banking platforms are not going to be your traditional banks. No more brick and mortar and forms that would mean you need to take time out of your schedule, pull out your magnifying glass and read the fine print on each line.

Financial platforms of tomorrow are going to be technology firms, it’s undeniable and inevitable. We’d be naive to imagine that future generations will open bank accounts the same way we did, through the traditional methodology and at traditional banks. With the tidal shift landscape and the expectancy of convenience from today’s customers when it comes to services like banking. The first bank accounts aren’t going to be at your JP Morgans or HSBC, but instead with companies like Facebook or Apple.

There’s irrefutable truth to this theory and it gets a lot more real when we start to notice that traditional banks are worried about losing out their market share and customer base, and rightfully so, who wouldn’t be?

Henri Arslanian talks about how non-traditional banks (tech firms) have the added advantage; they’ve got daily existing touch points with all their users and banking customers. This coupled with a seamless process, customer delight and even our trust and confidence, translate to a very successful banking module for the future, and the future is today.

This is possibly the pivotal point that tech companies such as Facebook have used to their advantage. In a data-driven age, with minimal human sentiment involved with the applications we use, we’re surprisingly still pretty comfortable with sharing pictures of our loved ones and children on social media platforms. Henri makes a pretty good point, think about it, when we’re talking security; our family is all the way up on that pyramid of safety and security – if we trust an application with information related to our most prized possessions, tech companies see no reason why we’d be hesitant if we were to use the same application to transfer money to friends and family, and we aren’t.

The same applies to the e-commerce giant, Amazon. From window shopping to add to carts, to checkout and ultimately trusting them to to the point where we’ve decorated our homes with their products and even recommend the same for near and dear ones; we see no reason why consumers wouldn’t use the same company to purchase insurance products. This dynamic combined with the fact that we’ve got over a hundred different, personalized and niche fin-tech startups jumping on-board the future financial express and offering products and services that were only offered by traditional banks.

I recently came across what Henri defines as peer to peer lending platforms that offer you great alternatives to loans, that up until a few years back were only available at traditional banks. Out with the old in with the new, we’ve got robot advisory platforms that are fully capable to tackle and take care of asset management services and solutions – but this isn’t really the kicker that’s got traditional banks worried.

The fact that tech companies are a lot more transparent in how they operate in terms of what your charged and are a lot cheaper than traditional banks, is an extremely worrying point for traditional banks.

Banking in the 21st century.
It’s Personal this time around.

With better customer relations, delight and interactive customer communication on the upsurge, it’s a tech company’s dream come true to function within a banking space today. What’s Assisted their biggest advantage is the fact that fin-tech startups have the ability to pick and choose the parts of banking they want to get involved in, which more often than not are the most profitable part and the ones they have the most leverage over.

However, experts aren’t really worried about fin-tech startups putting them out of business. Over the years, there’s a definitive space that both parties to function within i.e the front end, the customer-facing end is handled by tech companies, this helps them understand customers better, gather data based on choices and ultimately better serve their consumers, while the back end, or the vault as people within the banking industry like to call it is handled by traditional players within the industry.

Think of it as an ecosystem where traditional banks are handling your back end of the business and have over time become the commoditized utility providers to technology firms and fin-tech startups that control the front end side of the business (customer experience) with absolute ease.

Financial Inclusion.

We’ve got more than 2 billion people in the world that have close to nothing or are completely unbanked. They’re individuals that have zero to no access to bank accounts, no way to meet their financial demands, and no way to borrow money for college or business ventures. They save money the old fashioned way, stuffed inside their mattresses or those secret little panels between the walls behind their old cupboards.

Now, this might seem like a problem for just those 3rd world countries, but in reality, the problem is a lot deeper than just underdeveloped countries. Studies show us that in cities like Miami and Detroit the percentage of households that are unbanked stand at a whopping twenty percent!

With an estimated population of 673,104, that means that 134,620 households are completely unbanked! Fintech startups and tech firms look to empower these individuals with financial security and are paving the way for financial inclusion.

In a world where the front page is more often than not filled with unsettling news from near and far, we’ve got your and energetic financial firms that are making a positive impact in people’s lives. According to the World Bank, over the last five years over 700 million people went from being unbanked to being banked! Take a minute to wrap your head around that number, that’s two times the population of the United States alone!

The fintech industry has slowly yet surely been working to transform the financial industry as we know it. Banking consumers no longer have to be from certain economic strata.

Artificial Intelligence Assisted Banking.

AI-powered digital assistants that replicate human conversation are replacing call centers faster than initially perceived. Bio metric data and voice recognition are steadily replacing those pesky tokens and passwords we tend to forget. We’ve got fin-tech connected to IoT and wearable technologies, banking on the go? No problem. A place where our car insurance premiums automatically start to go down based on the fact that our cars know that we’ve been driving safely and with the help of AI-assistance in our cars, our insurer is notified of the same. The inclusion of tech firms within the banking sector has made all this possible and more. In short? It’s embedded banking in our day to day life.

AI & Fintech.
Banking transformed.

Banks have realized that the landscape which was once changing a few years back, has taken a tidal shift and completely changed as of today, and in order to keep up with the current market requirements, they’ve had to evolve as well. While some will succeed in integrating this innovation into their everyday banking, many are tipped to fail. Citibank estimates that over the next ten years about 30% of banking jobs will simply disappear, replaced by AI-powered digital assistants. How this will affect the job loss and all the related economies built around banking such as law firms, hotels, and even restaurants is left to be seen. While most peg it down for the greater good, some seem skeptical and almost jaded at the fact that one in two jobs will be replaced with the use of innovative technology.

If the course of how things have shaped up over the 10 years has taught us anything, its that the bankers of the future aren’t going to be your traditional suited bankers with their proverbial briefcases and ties, but rather designers, dressed in white techy shoes faded denims and sporting shabby haircuts, innovative coders who run on more coffee and Cheetos, and genius creative thinkers.

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