Non-traditional banking is a threat or opportunity for the banks
Since the 2008 financial crisis, the non-traditional banking started growing as banks need to abate on technical innovation spending and fully target on the retrieval headway leaving a vacuum for fintech companies. Many fintech companies have been sweating to make the payments less complicated for the customers. But now it sounds like a pitfall for the traditional banking as non-traditional banking have procured around one third of the new revenue of traditional banks.
Today digital wallets are broadly subscribed and offer an effortless and secure digital transaction. Non-traditional banking is selectively targeting on the pain points of the customers and making the integral system of payments a lot easier than ever before.
Studies from McKinsey and IBM estimated that up to 35% of the banking industry’s profitability will be wiped out by digital technologies.
What banks can do to handle this situation: –
Mobile Banking: – Banks should focus on offering an easy to operate and secure platform for the customers with the help of a mobile banking application. According to a Citi mobile banking study in 2018 mobile banking is one of the top three most used apps by Americans.
Change Marketing Strategy: – Banks also need to change their marketing strategy as people are more allied to the internet than other media devices these days. According to a survey average time a person is spending on internet is increasing every day. So, banks should take advantage of these platforms to promote themselves.
Rewards and Discounts: – Rewards and discount is also a considerable reason why millennial are shifting very fast to the non-traditional banking system. So, banks also need to come up with the better rewards and discount plans to captivate customers.
Tie up with fintech companies: – Fintech has been the buzzword of 2018 and tie up with fintech companies can support the financial institutions to become technologically prepared for the future threats of cyber-attacks. It can also help the banks to come up with new innovative ideas to solve the traditional banking problems.
Secure Digital Payment Method: – Providing a secure digital payment method is the primary element which can lift the banks to compete against non-traditional banking system. The volume of digital payments is rising every day and the total amount of digital transaction was almost $600 billion US dollars last year. So, if banks can come with an innovative idea to present an absolutely secure digital payment method to its customers it can help a lot to the banks.
So if banks focus on these things they can easily compete with the non-traditional banking to a large extent. Non-traditional banking is not a threat for the banks but it’s an opportunity which can make things easy for the banks and also can help the banks to reduce their operational cost.