Why banks are rightly nervous of the fintech boom

Traditionally, people went into their high street bank, talked to their bank manager or assigned adviser and decided where to invest their money or take out a loan, including mortgages. Increasingly, fewer banks have a high street presence in many towns, as the future becomes online. However, it is often not the traditional banks which are embracing new technology, but fintech companies.

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Fintech is good news for investors

Fintech, or financial technology, is changing the way people make payments, transfer money, arrange loans, raise funds and manage their assets. More than $12 billion was invested globally in fintech in 2015, and this figure is forecast to grow sharply over the next few years. Everyone can benefit from fintech. Entrepreneurs can quickly raise cash through crowdfunding sources, younger workers can invest savings easily online and poorer families can also access loans, without having to fall into the hands of high-risk lenders or pay extortionate rates of interest. Fintech can help everyone manage their savings, save money and make long-term investments such as pension plans.

Previously, this was predominantly the business that banks provided, but personal finance apps now mean that investors can decide where to place their money without going through the bank or a financial advisor. Robo-advisors will look at their needs and the amount of money they have or need, and then use algorithms and statistics to make an impartial decision, whereas previously banks may have been tied to certain companies or recommended packages which offered the best rates of commission.

Adapting to change

It is unlikely that fintech will replace banks altogether, but they will need to adapt. Millennials are very confident in conducting financial transactions online and want an instant response. For this reason, it makes sense for advisers to also invest in technology, by streamlining as many services as possible. There is a range of software and apps to deal with the back office systems of IFAs. These can keep track of all customers and their investments. To see what back office systems for IFAs are available, https://www.intelliflo.com/ can advise.

All companies are having to embrace the advantages of technology and find a way to deal with any disadvantages. The world is changing at a rapid rate, so those working within the financial world need to adapt to these changes too.

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