The world of Fin-tech's and online banking seems to be the new way of life with continuous start-ups 'shaking up' the High-Street Bank industry - making it easy to lose sight of high-street lenders innovating and developing technology for their current consumers. In this blog we discuss what digital banking has to offer and how the traditional brick-and-mortar banks are adapting to counter this.
British banks are starting to adopt different approaches to their high-street presence in order to win over their consumers, as the rapid development of a cashless society starts to become mainstream. The growth of contactless payments and digital banking has led banks to shut thousands of their branches on the high-street, this being said, what does the future look like for the high-street banks?
Before the integration of technology within the industry, banking involved visiting your own local branch or heading to a cash machine to withdraw money - however, once personal computers and internet connections became the 'norm' in any household, managing your bank account and making transactions at any time became easier.
With it becoming even easier to use online banking anywhere you like, Fin-tech companies were born. Fin-tech's have had a profound impact on the UK's banking sector, resulting in the industry having to directly compete with the new wave of innovation, with companies like Starling, Monzo, Revolut and Curve leading the way.
Digital Banking
Digital banking is quite different from the traditional banking method, and it offers many outstanding benefits to their consumers and businesses. Here are some of the advantages that digital banks offer.
Time Efficiency - Time efficiency is definitely one of the key advantages that digital banking has. Whether you need to make a deposit, transfer some money or even check up on account information, it can all be done via a website or an app. Digital banking makes the process a lot easier and things can be handled a lot faster than it typically would be in-store.
Cost Efficient - For the most part, digital banking means fewer costs as there's no need for maintaining physical branches, transactions carried out don't require third parties, which is often the case with traditional banks. Automation of many banking processes also means fewer staff are needed - creating considerable cost savings, which can be passed onto customer fees making them exceptionally low and in some cases, only charged for premium services.
Convenience - Digital banking also makes things a lot more convenient since consumers often prefer to take payments online, meaning there's no longer a need to go into a physical bank. Cash machine usage is also falling as contactless payments are now the main source of transactions. The Covid-19 pandemic has added to this as fewer people want to handle money due to the risk of passing infection - this is set to continue.
Digital banking definitely has plenty of advantages, which creates a lot of competition for traditional high-street banks with the likes of Wise, Monese, Atom Bank and many more. So how have the traditional banks already adapted in order to keep their loyal consumers and gain more?
How Banks Are Adapting
The traditional brick-and-mortar banks have been adapting for a while in order to keep their consumers and to attract more. With every discussion, there's plenty of advantages to look at, so we decided to look into what they've been doing in order to compete with the new innovation wave of fin-tech banks.
Rather than banks seeing fin-techs as their competition, it's much better to create a partnership. Fin-techs can use cutting edge technology to build streamlined, innovative API's, which can replace a bank's 'old fashioned' products. This flexible approach will help enable banks to reduce their current costs and give their customers a far better experience with competitive prices.
Fin-techs that work with banks help to find and provide solutions to ongoing security threats and in return, these businesses will benefit from the bank's trusted name, reputation and even their own customer base. HSBC, for example, was actually the first UK high-street bank to launch a successful stand-alone open banking application.
The traditional banks have also heavily invested in their online and mobile banking services in a bid to compete with the digital providers. This has included providing customers with perks such as being able to pay for purchases using virtual contactless cards on their apps and giving them the ability to cash-in cheques from the comfort of their own homes.
The world of Fin-tech's and online banking seems to be the new way of life with continuous start-ups shaking up the high-street bank industry - making it easy to lose sight of high-street lenders innovating and developing technology for their current consumers.
The future of in-person banking still looks to be uncertain, and financial institutions of many different sizes are starting to rethink their branches to meet new consumer needs. It seems to be unlikely that we will see a large wave of retail branches closing in the near future, however, your local bank branch will most likely look and function very differently due to the development of technology and competitiveness towards other online based banks.
Consumers are likely to still trust banks over the new start-up companies to hold their money responsibly as banks have spent decades on building trust with their customer's, while FinTech start-up's will have to be patient and earn their customer's trust over time - although they seem to be doing this pretty efficiently.
Here at Talented Recruitment Group, we're looking forward to see what the future has to offer for both digital banks and the traditional brick-and-mortar banks.