Fintech companies represent a niche industry at the peak of innovation, quick to respond and adapt to ever-changing needs of their customers. They’re leading the way with ground-breaking money management apps, online lending options, and mobile wallet opportunities. Trailing behind them are conventional retail banks, stalled by outdated banking models.
These financial giants have a choice. They can remain unchanged and continue to offer traditional services to an increasingly frustrated consumer base, or they can follow in fintech’s footsteps. Many of them are choosingthe second option, as it’s the only these financial stalwarts can remain relevant in an increasingly digital age. Though they may be slow and cumbersome in comparison, here are three ways the biggest banks are copying the fintech industry.
Money management apps
By far the most popular money management app on the web, Mint has over 20 million users. The app was a trailblazer in 2007, and it remains a huge force within the financial world today. It’s a mobile budgeting app that offers an easy way to track expenses by synching up with users’ banking accounts. Though a leader within the industry, it’s not alone. Joined by countless others, including Spendee and YNAB, Mint represents consumers’ growing demand for personal financial accountability.
In seeing the rise of the money management apps, the world’s biggest retail banks realize they need to offer similar services if they expect to stay relevant. In 2015, Captial One purchased the Level Money app. Two years later it shut the app down to pursue its own personal finance platform. Bank of America went another route by incorporating many of the Mint’s features into its online banking services, like spending and budgeting tools and bill notifications.
Online lending options
Convenience and simplicity have cachet in the financial world, especially when consumers are looking for critical financial assistance in the face of emergencies. A growing base of online cash advance lenders that include MoneyKey recognize this mounting need, which is why they’ve eliminated many of the barriers complicating the borrowing experience. Their digital platforms — including apps and websites—process a consumer’s application for a cash loan quickly. Once it’s approved, an online process makes it possible for lenders to issue an advance via direct deposit, and borrowers can repay it with convenient e-payments.
Two banks taking their cue from these direct loan lenders are PNC Financial and Barclays — both of which are moving into the online consumer lending space — though no bank matches the speed or ease of cash loans from lenders like MoneyKey.
Digital Payments and Mobile Wallets
Recent digital currencies like Bitcoin in the news make it seem like digital payments is a relatively novel method, but it’s actually nothing new. David Chaum invented the first digital cash back in 1983 — a whole 25 years before Bitcoin was invented. But it was PayPal, Google Pay, and Apple Pay that really spearheaded the mobile wallet movement. These three giants made it possible to pay for transactions in-store with an app acting like a credit or debit card. Only those users who had an account with these companies could participate in digital payments.
Things have changed, and now most retail banks have created their version of the Google Wallet and Apple Pay. From TD and BMO to Bank of America and Wells Fargo, many of the biggest banks offer their customers a way to pay for things through their official apps. By 2020, it’s expected that 90 percent of smartphone users will have used their mobile wallet to make a digital payment.
The traditional banking model is dying, and traditional retail banks are struggling to retain customers. Fintech is experiencing no such troubles. By disrupting traditional banking and offering innovative financial services, the fintech industry is experiencing exponential growth. The only way conventional banks can expect to keep up is by tapping into what consumers want by copying fintech’s online and convenient services.