The modern technological process is so fast-paced that what was a wonder for us yesterday is now a daily thing. Every day something more unique and perfect is born. The technological process in the credit, banking, and financial spheres does not stand aside either. In modern conditions, the introduction of innovations is not only the most important factor of structural transformations in the economy but also the driving force of changes in the market of banking services.
Fintech banking software introduced in the banking environment has a number of features:
1. Banking institutions are under the influence of the system of regulation and supervision, which limits the process of introducing innovations.
2. A significant part of banking innovations are solutions borrowed from other spheres of social production or caused by changes in customer requests.
3. The main tool of intellectual property protection for the bank’s innovative objects is not patent protection but know-how and copyright.
4. Banking innovations are based on applied rather than fundamental scientific research, which significantly reduces the level of expenses for innovative activities of banks.
At the current stage, many innovations have already been introduced into the banking sphere, and many of us already know the answer to the question, “what is open banking.” Let’s have a look at some fintech banking solutions:
Modern technologies of contactless payments (MasterCard, PayPass, and Visa payWave) make it possible to carry out operations by bringing a plastic card to the terminal. Most retail chains, including cafes and gas stations, support PayPass technology.
Simplified money transfers and payments.
It is considered a very convenient novelty in the market of banking services as an ability to make payments through a mobile bank. It is successfully used by millions to carry out the following operations:
- Issue a money transfer.
- Pay for goods and services.
- Exchange currency.
- Pay for utilities.
The possibility of issuing a loan through the ATM and an SMS request.
In many countries, a new service for issuing cash loans through ATMs is already operating.
Virtual online consultants (chatbots).
This service provides an opportunity to consult with a virtual Internet consultant who will tell you about banking services. Communication with such an assistant will help to replace a real call center employee.
In 2012, the Japanese banking company The Ogaki Kyoritsu Bank, Ltd put into operation new ATMs that allow the customer to access their accounts by placing their palm on a special scanner. Also, some banking institutions use the identification procedure, which is carried out by comparing the position of the user’s eyes with their photo in the passport. This procedure allows you to detect and protect against fraudsters.
Banking of things.
In the era of “The Internet of things,” it is quite logical that banks are also taking steps toward such changes. When banking operations are massively transferred online, all spheres of everyday life are also connected to the Internet and, therefore, to cashless payments and wire transfer services.
Banking without banks.
The provision of banking services without direct participation in this process of the banking institutions themselves appears as a promising direction of banking. The so-called FinTech companies are entering the market, replacing banks in the provision of banking services that were once complete. Such companies develop unique, innovative offers and offer more flexible and often more favorable conditions for using their products. For example, the development of savings programs for phones, where the program itself calculates income and accordingly determines the level of savings that should be set, as well as the direction and options for depositing these savings. Visiting a bank branch and even independently searching for the most profitable options for investing saved funds are no longer necessary. A virtual financial consultant can provide such services instantly and, even alone, withdraw the required amount of funds for savings from the account every month. Some analysts even believe FinTech companies represent the future of banking services and can almost completely displace traditional banks from the market.
One of the leaders in implementing innovations, including in the banking industry, is the smart Chinese city of Yinchuan, which does not require money or bank cards. In this “smart” city, your bank card is the customer’s face.
For example, personal identification systems are installed in all city transport, and payment occurs automatically when entering the transport.
It should be noted a number of innovations that have prospects for implementation in the near future:
Instead of a pin code, a fingerprint will be needed.
They say that soon, in order to get cash or pay in a store with a plastic card, you will no longer need a pin code because cards containing your fingerprints will appear.
This idea was proposed by the Norwegian startup Zwipe, which, together with MasterCard, plans to issue similar cards. And in 2015, the Alibaba organization offered an unusual method of identifying the owner of the card. Instead of entering a code, you will need to take a selfie.
The database called “blockchain” will become relevant.
Blockchain is a database in which there is no central control. All the processes taking place in it are without the supervision of higher authorities. For example, you can conclude a contract in the blockchain without the services of a notary, and when buying real estate, you will not need a state registration authority. In other words, the blockchain works without intermediaries, and the authenticity of all concluded transactions is confirmed by the network itself and its participants. Such global banking organizations as Goldman Sachs, JP Morgan, Credit Suisse, and Barclays have jointly taken up the study of the blockchain.
Virtual Internet banks will begin to replace traditional ones.
In the banking services market, online banks such as Ally Bank, Discover Bank, Monobank, and First Internet Bank are already not low-grade in comparison with traditional banks in their functionality. On the contrary, they are available to customers anywhere with an Internet connection.
Therefore, in pursuit of the goal of reducing costs as much as possible and improving the quality of services provided, banks are increasingly beginning to look towards artificial intelligence. The identified features indicate both positive and risky aspects of introducing innovative development models. However, in general, they allow for the formation of new principles of conducting banking business, create new consumer values for customers and ensure the growth of the bank’s competitiveness in the financial market.