The COVID-19 health crisis challenged traditional banking models, pushed innovation to new heights, and made the online and mobile experience more vital. Now financial institutions need to reinvigorate banking experience to meet the consumer’s accelerated shift to digital and competition from Fintech 3.0 advances.McKinsey & Co.’s modeling of COVID-19’s impact projects 15 to 20% of banking customers surveyed in Italy, Spain, and the U.S. expect to increase their use of digital channels post-pandemic. Should these evolving tendencies become banking’s post COVID-19 new normal, McKinsey foresees retail banking distribution picking up three years of digital preference acceleration in 2020 alone.
So far there have been largely three ages of FinTech:
- Fintech 1.0 (1866-1967): which covered the placing of the first transatlantic cable to invention of the ATM. Although connected with technology, financial services continued generally in an analogue environment.
- Fintech 2.0 (1967-2008): The digitization of finances amplified as the traditional regulated financial services industry used tech to produce financial products and services such as electronic payments, clearing systems, ATM machines and online banking.
- Fintech 3.0 (2008-present): Shaped by the financial crisis, when the public began distrusting conventional banking services, business-to-consumer (B2C) or direct to consumer startups ascended. Then these B2Cs accelerated due to the current pandemic as digital services became a primary means by which people access financial services.
This third wave of the Fintech evolution is particularly important and is likely to have lasting effects on the financial services segment due to the current speed of innovation and the maturation of Fintech 3.0. The business-to-business and even the business-to-business-to-consumer models are making comparable strides compared to B2C Fintech. Over the last few years, direct-to-consumer Fintech in particular has taken off in popularity because they greatly improved the customer experience across many financial applications.
Fintech 3.0 is redefining the delivery of financial services by using cutting edge technologies. This newest trend has fintechs integrating artificial intelligence, machine learning and other services into banking to enhance financial brands.
Given this new normal, financial institutions may choose to reconsider their revenue drivers, and seek new product introductions and/or updates of their offerings to include security, advice-giving, and analytics to help identify relevant markets. Banks and credit unions can use open application programming interfaces to help them benefit from these innovations to deliver a better member experience and lure back market share.
This means financial institutions must leverage highly integrated services to enhance, their business’s value to customers. Pivoting toward these new Fintech 3.0 models requires financial institutions to integrate APIs into their core environment. NXTsoft offers secure, open APIs to seamlessly connect fintech solutions to financial institutions facilitating real time data sharing across all channels.
NXTsoft’s vendor agnostic OmniConnect Platform, the premier open banking marketplace for all API needs, uses cutting-edge cloud technology to connect fintech solutions to financial institutions, ensuring that NXTsoft clients have the most secure and reliable integration environment in the industry. OmniConnect provides the access needed to the financial institutions information, removing integration obstacles and providing a seamless connection between third-party API solutions and financial institutions’ core digital banking, item processing and financial systems.