As people grow increasingly reliant on mobile and online solutions, the world of fintech has grown at a breakneck pace. With an industry that’s often perceived as outdated and antiquated, tech leaders are making big moves in finance and capitalizing on its desperate need for updating.
Banks know that they have no choice but to embrace fintech’s influence, but according to a recent Reuters article, financial regulators foresee challenges with decentralization and regulation compliance. Bora Yagiz from Reuters explains, “Despite its benefits, however, fintech’s decentralized model is also making it harder for regulators to understand its various components, and to design adequate rules because they have traditionally been dealing with central hubs of activities.”
So with the ever-expanding toolbox that is fintech, regulators might see it as a nightmare for compliance and standardization. It does seem like this could be a fleeting challenge though, especially as fintech becomes more deeply engrained in banking culture and more agile standards are developed.
As far as banks are concerned, the consumer benefits of fintech solutions arguably should outweigh the challenges for regulators, specifically with regards to transparency. By adopting cutting-edge fintech platforms, banking becomes a less stressful and more intuitive experience for consumers. Because their banking experience is more transparent and more direct lines of communication are opened with their bank, customers are more likely to build brand loyalty.
The significance of transparency cannot be stressed enough, especially following the financial crisis of 2008. Even with the crisis taking place nearly a decade ago, banks are still struggling to regain the trust of their customers, millennials in particular. Transparency and authenticity are values that millennials especially look for in a brand and with them as the dominating demographic in the workforce, this makes their preferences a priority.
Because of their ability to streamline communication, fintech leaders could be positioned as champions for transparency. Banks would be wise to adopt both the solutions that build a bridge between them and their customers.
