Historically, banks have been early adopters of technology — think ATMs, digital ledgers, online banking and debit cards. But lately, many traditional banks have been slow to embrace the latest innovations as other tech companies have given consumers more ways to spend and transfer their money. A 2018 global banking study found that only two-thirds of banks planned to invest in technology that would help them “acquire, engage and retain customers.” The most important way to acquire, engage and retain customers is to offer them the tech-based tools they want. To remain competitive, traditional banks must become more innovative and once again embrace new technology.
The Current Landscape
Consumers and businesses live in a digital world. According to Statista, more than 23.5 million U.S. households are expected to use mobile banking in 2020. If a bank does not have an evolving and innovative tech strategy, it will fail to meet its customers’ needs.
Fintech is a hot area for startups that take one aspect of a bank’s services and provide a tech framework to do it. Often, their offerings are cheaper and faster than those of traditional banks — over a short period. However, financial services is a regulated industry, and regulation eventually slows them down. This is the last significant moat for the banking industry, but this slowness will not last forever.
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