In today’s world, consumer needs as well as mode of delivery has evolved affecting and influencing both economic and financial sectors in the society.
Statistics have shown that since the pandemic there has been an instant increase in demand for services that are offered via digital technology than traditionally.
The technology dependency trend though had been in vogue spiraled with the work from home policy which was mostly achievable with the new improved technologies and e-commerce developments, making working and shopping from your comfort zone possible.
The financial sectors were not left out as a significant number of fintech companies continued to emerge and provided easier ways for customers, organizations and business owners to manage their finances.
This brings us back to the purpose of this article which is focused on the Ideal banking system for consumers and SMEs. To arrive at an answer, we would be highlighting a few determining factors.
Let’s get on shall we !
Mode of delivery
One factor to note is the difference in the mode of delivery at which both banking platforms operate. Fintechs provide their service online while commercial banks provide their services offline and online (Hybrid), though the commercial banks are still quite limited as not all issues can be solved from your phone because some setup has to be done at the bank.
Over the years, Fintech companies have proved efficient and continued to establish a strong hold in the financial sector with its ability to offer clients automated and improved financial services that are swift and easy. Commercial banks on the other hand are still quite popular and have the upperhand of having an established physical institution, active staff and a customer base. This also fuels trust which consumers would have more for commercial banks over fintechs and startup companies in terms of responsibly holding their money and personally i for one think it is expected as most people fear possibilities what might be if anything were to happen , i mean who would you hold responsible, it is believed that savings with fintechs are basically at owner’s risk.
Even with these developments let’s not fail to acknowledge that some fintech companies like Paystack, Kuda, Piggy Vest etc. have gained the trust of the public with its services. The advantages of both financial services goes both ways, where one lacks the other provides. Unlike commercial banks, most fintech companies are operated via online channels and do not have physical spaces for customers who intend to lay complaints or rectify issues.
Service Efficiency
There’s also the issue of self service as fintech companies are also quite limited to tech savvy individuals. As for individuals who aren’t tech savvy, self service might be a hard knock to crack.
This development has made the target audience for fintech companies referred to as “Modern” and characterized by mostly youths.
Another advantage of the fintech has on the issue of service efficiency is its ease to setup/sign up making it easy to set up an account, pay pills etc. from your comfort zone.
Before the emergence of fintech companies who could ever imagine the possibility of controlling your finances from anywhere across the world and not necessarily needing to visit your bank.
Yes! With Fintech companies becoming popular, this has become very much possible. Commercial banks are much more preferred by a significant percentage of consumers, especially the older generation. I mean some services are best handled with the help of a customer representative.
Nevertheless, the ease and swiftness of services provided by fintech companies cannot be overlooked.
Cost of Service- COT fees etc.
Unlike Commercial banks, cost of services for fintech companies is quite less as well as affordable as every transaction is seamless and is done on mobile phones, computers etc.
Fintech companies like Kudabank before now even offered zero charges on all transactions. Piggy Vest offers a saving platform with Zero demands on charges and the list goes on and on. This saved not just cost but time as well. Commercial banks are known to be a bit costly in terms of operations as charges are put on banking services, savings services etc. this development has fueled the increased demand for fintech banking platforms.
Customer service
Just as pointed out earlier, when it comes to customer services, Commercial banks prove to be much preferable as it possesses a physical location which you can visit to lay your complaints on banking issues.
Fintech companies on the other hand can be quite tasking as everything goes on online, there sometimes could be issues like bad network, lack of understanding between you and the customers reps, no provision for customers reps etc. though its advantage is that it is quite easier to access because you do not need to go to the bank but let’s not forget the fact that some issues are preferably better solved in person and asides this a client is more to feel safe when speaking with an actual person.
FinTechs also have the edge of having a customer service available to their customers 24/7 as it is an online banking system though its customer service in most cases are characterized with self service or chats online with a customer representative while commercial banks customer services are quite limited. Some commercial banks are changing the status quo with banking apps and other technology related services to make sure their customer service is available 24/7 to its customers. An example is Zenith’s bank Just Ask Ziva.
Reliability
When it comes to reliability, Both banking systems make sure to deliver at various levels. Commercial banks have proved reliable providing efficient services to both its customers online and offline, same goes for the fintech companies.
Additional Features/Services
It should be noted that the big changes caused by technology dependency coupled with the competitive nature of the financial sector has encouraged most commercial banks towards adopting a banking system that serves its customer base with digital technology. Banks like GTbank, Access Bank, Zenith Bank, etc. are improving their banking system technology wise on a daily basis. Most banks have adopted the use of Apps, USSD codes, artificial intelligence, machine learning and data analytics for easy transactions, mobile top up, bill payments etc. while also tapping into resources that would better position them in the digital space and providing its clients base with a fast and efficient service to improve their financial lives.
Fintechs are known to be the banking platform that provides solutions to digital banking services including international banking, transfers, forex payments etc. this quite puts fintech ahead as ecommerce, forex trading and digital marketing has become the order of the day. Fintech platforms are changing the status quo, taking banking to the next level and making it possible for the above transactions to be possible.
Commercial banks though are stepping up their game in terms of e-banking but sometimes are quite limited.
Loan Applications
Commercial banks have from time in memorial known to offer loans to businesses and individuals considering that the expected demands like collateral, guarantor etc. are met.
To keep up with the pace of commercial banks in terms of ability to provide loans, manage deposits, plan retirements, borrow and invest, fintechs have stepped up their financial offerings even though the idea of downloading one app for investment and another for loan etc. might prove to be quite stressful especially for those who aren’t tech savvy.
Kuda bank for instance makes room for short term loans with a few conditions such as being a frequent user.
However, with the continuous reliance on the internet and the growing trend of tech dependency, more consumers choose to opt for digital channels for financial transactions due to the convenience it offers. the tech dependency trend has not changed the reliance and trust the public has for commercial banks when it comes to delivery, like said earlier, commercial banks are still very much popular and most are sailing the digital space to continually improve its service and keep their clients satisfied.
Commercial banks also remains a point of reference as the origin of financial institutions and services but with tech dependency fast becoming a norm, financial services offered through digital technologies is the future.