Change is common practice in the finance world, enabling the industry to stay vibrant and ultimately on its toes. For many years, traditional banking institutions have led the way, steering consumers through economic hurdles. But now there’s a new name in town. Once labelled alternative lenders, now fintech is forging a new narrative and ultimately proving that they’re here to stay.
As such, we find ourselves at a transformative crossroads. With a focus on technology, innovation, and customer satisfaction, fintech is turning everything we know about banking on its head and challenging everything that conventional banks once told us was right.
In this article, we explore exactly what fintech is and how they are often outsmarting traditional banking. As well as this, we’ll look at whether incumbent banks really have a place in our modern future or whether fintech has firmly taken hold of the financial world’s crown once and for all.
A Snapshot into Fintech
The word fintech fuses from ‘financial technology’ and symbolises the use of advanced tech within financial services. When they first appeared a few years ago, many sceptics were quick to say that fintech wouldn’t be able to keep pace with conventional banking organisations. But now it appears the truth could be the other way around.
The rise of fintech can be attributed to several factors – their user experience, tech expertise, data power and ever-evolving regulatory support. At the focus of everything they do, fintech companies prioritise their customers, going above and beyond to create smooth and engaging experiences that make banking easier than ever. They use technology like AI, machine learning and blockchain to not only set new benchmarks within the industry and offer real-time revolutionary solutions but to also delve deeper into customer data and again be able to offer even more specific products. In addition to this, several global organisations now support fintech and a series of international regulations have meant that fintech is increasingly becoming the go-to choice for consumers.
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Fintechs are on a mission to create a newer and more adaptable lending model too. For starters, compared to traditional banking methods, fintechs use diverse data to assess risk giving more businesses the opportunity to access finance. Using a wider range of data also means that lending solutions can be adapted to suit business needs. What’s more, fintech decisions are often much quicker thanks to a plethora of technology that speeds up the loan process and this tech is also allowing businesses to navigate their finances more freely and effectively. In addition to this, fintech services are often able to integrate with other technology and processes, which further enhances the overall customer experience.
One thing’s for sure, fintech isn’t just changing the norm, it’s completely resetting what we know about everyday banking. And this shift is more than just a change of power. It paints a vision of the future where finance is simplified. If traditional banks want to be involved, they need to start making changes now.
Fintechs vs Banking Giants
Some of the most popular fintech names you might recognise include Starling, Revolut and Monzo. They have redefined banking, reshaped user expectations, and created real-time services and easy transactions at the touch of a button. This is just a basic overview of what fintech can do but it’s a clear reminder that traditional banks must modernise their age-old practices and pivot their services to meet customer demand like fintech does. This might sound like a challenge but currently, many banks have made the switch including JP Morgan which has initiated a full digital transformation across the board.
But fintech isn’t just making waves in the consumer banking sector. In the business finance domain, Pulse is one fintech organisation that stands out – an innovative and cutting-edge analytics platform on a mission to redefine financial decision-making. By using AI-powered insights, Pulse provides businesses with intelligence-led information that allows them to act and compete more fiercely in the market. As developments continue to unfold in the finance sector, data, and tech, like Pulse, are sure to become even more crucial.
Chirag Shah, founder and CEO of Nucleus Commercial Finance and Pulse has over 20 years of experience in the financial services industry and a deep understanding of the needs of UK SMEs.
In 2011, he founded Nucleus, a leading alternative finance provider, to offer flexible and tailored solutions for SMEs across various sectors and stages of growth. With an understanding of the challenges that UK SMEs face in the current economic climate, Chirag launched Pulse in October 2022, a free-to-use service that helps businesses and accountants gain insights into financial performance with AI-powered data visualisation and personalised dashboards. Chirag is not only committed to driving growth and innovation in the UK business ecosystem, but he’s also helping SMEs better understand their data to boost their profitability and guide them towards success.
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