Traditional Banks Continue To Falter As More Promising Financial Services Amass Popularity
Mar 07, 2023
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People used to rely on traditional banks for most of their money management needs. Today, tech has evolved, and consumer trends have shifted with it. There are now alternative ways to ensure financial prosperity.Last year came the gloomy warning that Britain’s banks were no longer ‘too big to fail’, with their risk management practices repeatedly coming under fire too. The situation has not changed, nor is one likely to occur in future. Traditional banks have often come under heavy fire when the economy is in trouble. This has harmed their reputation and allowed new financial services to rise.
As traditional banks decline, it’s only right for other financial services to step up. Of course, not all of them are banking substitutes, but they offer a host of money management services for people of all types. You should ensure you are well-informed about all the new pieces of financial technology in the industry. This will be especially useful to you if you are working within the financial industry in some way. Many financial services have entered the market, and they are popular for a number of reasons.
So, why are these financial services building public goodwill while long-standing banks fall by the wayside? Let’s explore this enquiry further down below.
Better International Business Solutions
Traditional banks can sometimes be cautious about overseeing international business payments. They’re understandably risk averse, but for some entrepreneurs, banks can end up slowing things down and throwing up unnecessary obstacles.
That’s why many businesspeople now open a UK multicurrency account with entities like Silverbird, who provide 100% online onboarding. Invoicing clients overseas is more efficient with their help, with international transfers made easy. Fast and technology-driven compliance procedures that understand your business are also utilised here. Top-tier international trade support can be found, with all their resources and solutions tailored to businesses of all sizes.
Therefore, if large or small companies have set their sights on global aspirations, they’re now more likely to redirect some of their attention away from traditional banks. All painful requests and unnecessary procedures are removed in these collaborations. Firms are streamlining procedures and eliminating wasted time however possible, and traditional banks are more likely to hinder than help.
Fintech Evolution
Fintech startups are popping up all over the UK and beyond. Their digital-based, which means they can quickly adapt to consumer needs. These services undergo maintenance checks and feature improvements regularly. Of course, every firm will have its own review schedule, but these businesses are always evolving. Because of that, they can draw in hefty interest from prolific investors willing to fund these projects even further.
By comparison, traditional banks can’t hope to artfully manoeuvre similarly. They’re confined to the branch, and while that sense of familiarity can give customers some comfort, it’s not enough to draw all of them in when more convenient money management systems present themselves.
It’s important to acknowledge that, broadly, Fintech isn’t perfect. Despite some record-breaking feats occurring in 2021, there have been setbacks since then. They can face obstacles with regulations and restrictive policies too. Some Fintech figures have mastered what they do, but the sector itself is relatively young. Still, as time passes, any signs of turbulence may well ease. So long as compliance measures are adhered to, Fintech firms can still move from strength to strength.
Rise of Mobile Banking
Of course, banking isn’t wholly obsolete. Even the banks realise that digitisation is inevitable and must invest more resources into their online tools. Their mobile apps are often the central focus here. Direct debits can be managed, cheques can be deposited, and bills can be paid with a few screen swipes. Standing orders can also be amended, with travel plans meticulously arranged too.
Mobile banking apps can also be educational tools as well. Spending habits can be monitored, and users can even view categories to see how much they’ve spent on eating out entertainment, and utilities. Furthermore, users can review their credit scores, enabling them to set long-term financial goals for themselves.
A lot here is packed into one app – to some, it may seem like almost everything and more! Still, the more convenient these offerings can be, the more likely that traditional banking will slip into obscurity. Each feature means there’s one less reason to visit a branch.
Chatbot Capabilities
Learning about financial matters wasn’t always straightforward. Meetings were needed with financial advisors or bank personnel.
However, a faster and perhaps even more efficient financial education can be found online today. Such is partly made possible with chatbots that are controlled by artificial intelligence. These tools can do a myriad of things, including:
- Provide support with transactions that were declined.
- Reporting stolen credit cards.
- Arranging reminders for PINs.
- Assist with setup for other payment tools like Apple Pay.
Chatbots can do more than just answer basic questions today. They can be a source of very meaningful support to those with financial support, and the services they provide are on-demand and 24/7. No telephone or real-world queues are required!
It’s worth noting that chatbots aren’t a viable solution for all financial queries. International business transactions will absolutely need human customer service personnel to advise accordingly. Still, in certain contexts, chatbots most definitely have their place, and that position can largely eclipse traditional banking in some instances!
Demographic Imbalances
The promising financial services mentioned so far are tech-based. Responses to this may vary across demographics.
After all, the younger and more tech-savvy generations are perhaps more likely to embrace these changes with great enthusiasm. Indeed, they are the future, and their response will likely have the most influence in guaranteeing the long-term staying power of these offerings.
Though today’s older business leaders may start converting currency with specialists’ help, regular members of the public could have more difficulty operating certain digital tools. Traditional banking may remain for as long as these people need them, but perhaps for not long after that time has passed.
High Street Closures
It should also be noted that tech is having an effect on more than just traditional banks, but the high street in general. As brick-and-mortar shops struggle to attract business, all the entities around them will likely experience a similar downturn.
It used to be that people would spend a weekend shopping, stopping in at banks to draw out cash or tend to some life admin in the process. However, as shopping trends also move online, traditional bank footfall could also take a hit.
Moreover, some traditional banks abandoned the high street in late 2020, and it’s hard to imagine a full-scale reversal of those strategies. The course is somewhat set now, and it’s likely only a matter of time before these moves are carried out elsewhere too.
Conclusions
It’s important not to despair over much of the news stated above. Not much is truly lost here, and most financial services are only moving online to become more efficient in helping international businesspeople and everyday people. Support is more accessible than ever, and prospects are being hard-fought for in the digital world, even as the economy and personal spending face their fair share of challenges.