Digitalization of the financial sector has been on the frontline news in the past few years. With a steadily rapid momentum, the world of fintech is expanding and prospering unimaginably. Finance and banking have been at par with health and medical sciences vis-a-vis essential services. The introduction of technology in all these sectors has occasioned an explosion of growth opportunities.
The Growth of Fintech
Digital finance has enormously disrupted traditional banking and financing methods. It has enabled banks and financial institutions to provide more customer-centric services without the need for physical branches majorly. Customers are not required to be present at the institutions physically for services that are available online. The magnitude of convenience experienced by people worldwide has prompted the success and expansion of fintech globally.
With more and more people realizing the power of e-banking, e-payments, easy credits, etc., it has become imperative for big banks and businesses to include fintech as part of their services. With hundreds of legitimate businesses offering competitive services, people can make use of the new customer-driven tactics that have been adopted by most fintech firms.
Because of the outreach combined with the convenience offered, the adoption rate of fintech has grown exponentially in the past few years. The pandemic especially compelled businesses and customers to explore online options that were otherwise not available or were limited. For instance, Russia has witnessed a 26% fall in the number of physical branches of banks in the past four years.
Not only has financial digitalization impacted businesses, where small and large businesses are becoming more fintech-inclusive, it has also affected the relationships that customers share with banks and financial institutions. User-friendly interfaces and simple procedures have become basic customer requirements.
Adoption Trends of Fintech
The growth of fintech globally only resounds the trend that there are millions and billions of consumers adapting to the age of digitalization. The number of smartphone users is one of the primary underlying reasons for such a steep line of success. Conducting transactions or availing of banking services has become so quick and easy that customers have started enjoying this convenience that comes along with digitalization.
Data protection and privacy are prerequisites that digitalization has to ensure. Although the system is not fool proof and there still are reported incidents of cyber-attacks, account hacking, money laundering, etc., the level of regulations and security that even small fintech startups have to follow is high. This makes the system quite secure, where customers can freely execute their everyday operations without persistently worrying about errors. Digitalization of finance is equipping financial data and information with technology. The margin of errors substantially goes down when there is minimal ambiguity and all data has concrete subsets; this adds to the trust and goodwill of digitalization, where customers have reassurance of error-free and quick processes.
Many surveys conducted on customer behavior and incentives have identified a few factors that have had the most impact on the digitalization of finance. These are:
- User-friendly interfaces
- Very fast-paced
- Easy and simple processes
- Secure systems
- Peer adaptation
- Offers and discounts
The advantages of convenience combined with security and peer-approval have enabled such a mass adaptation of financial digitalization.
The Role of Generation Z
Gen Z is also known as “digital natives” because of their innate abilities to understand technology. Having been born in the digital age, our newest generation has got the opportunity to use and adapt to digitalization like no other generation. Financial digitalization too has found strong support in this generation. The Gen Z has been the pillar that has bridged the gap between a digital world and the older generations.
The power of financial digitalization has been a global revelation. Fintech companies need to focus on strengthening their customer base and improving their reach to build a better foundation. To achieve this, startups and companies can work on a few areas which can help them develop a bigger and more powerful niche.
Improving financial literacy is one of the subsets of adapting to digitalization. With better literacy in terms of financial news and information, people can be in a better position to make decisions and choices. Introducing new digital concepts is going to raise questions and doubts, which can be minimized if financial knowledge is readily available and provided to people.
Technology does not need to stay within urban boundaries. There is immense scope for fintech expansion in areas which are not entirely inclusive yet. By spreading their reach in semi-urban and rural areas, fintech startups and firms can tap excellent opportunities as the majority of the population resides in these places all over the world.
The scope of financial digitalization became evident during the pandemic when people had started exploring alternatives to traditional banking and financial systems. The ease of use and convenience immensely appealed to the masses. The adaptation of digitalization happened quickly and smoothly, which only prompted its adoption further. Prerequisites like customer-centric services, readily available sources and information, and quick turnarounds have evoked the fintech revolution.