Learn how fintech can help financial institutions with digital transformation in times of crisis.
Prior to the pandemic fintech was clearly altering how consumers perceive financial services. Banking customers started to expect any transaction or service accessible through a traditional financial institution also be available online and through mobile devices. The crisis fast-tracked that digital banking transformation with the helps of application programming interfaces (APIs).The arrival of COVID-19 and applied social distancing rules accelerated banking’s digital transformation by months, if not years, and elevated the online and mobile customer banking experience overnight. Even banking customers who preferred in person-banking before became digital banking users when the branches closed.
Consumers sought — and now demand — personalized products with simple applications completed in a speedy manner, such as “one-click” loans, instant money transfers or quick investments.
The BAI executive report, “Digital Transformation Takes on New Urgency,” shared research on how generations like to bank and how after the worst of COVID-19 is behind us, many financial institutions will be taking a close look at their digital capabilities and figuring out how to make them better. Although BAI completed its survey of 600 Gen Zers, millennials, Gen Xers and baby boomers in January 2020, before the U.S. started to feel the impact of COVID-19, they said its finding nevertheless helped provide customer insights for digital financial services during the unprecedented times. For example, half of surveyed baby boomers — more than any other generation — said the ability to open accounts online would create a better digital banking experience for them.
When the lockdowns and quarantines took place financial institution accountholders found themselves leaning heavily on digital financial services, according to a Kasasa study, gathered online by the Harris Poll from 1,045 U.S. adults. The report revealed a majority of consumers (79%) found a complete digital experience important when selecting a financial institution. Financial services leaders also said they worried their organizations may fall behind in the digital transformation race.
A Pivotal Time for Fintech in Financial Services
Over the last decade or so the traditional banking sector has seen substantial changes in directives, the demand for customer-friendly financial services, advances in smart devices and the speed of technological innovation.
The internet, smartphone and on-demand retail have all played a role in changing consumer expectations. If a financial institution cannot provide the digital experience consumers demand, they discovered options elsewhere that can.
This created unparalleled opportunities in financial technology. Fintech start-ups introduced a new wave of competition and continue to challenge the status quo. Non-bank financial services providers likewise aggressively targeted traditional banking customers in areas such as payment and business management products.
To respond to needs and changes, traditional financial institutions; and core vendors have embraced open APIs and open architectures. The challenge going forward will be learning how to leverage new channels to keep up with the speed of innovation.
Not too long ago in order to meet consumer demands, financial institutions would have had to develop customized integration to third-party providers that would have taken years and multiple iterations, but with open APIs, a bank or credit union can quickly and easily integrate fintech into its system.
Fintech Partnerships Help Financial Institutions
Fintech continues to change how people (and businesses), invest, borrow, save and transfer funds through online and mobile services. This is a perfect opportunity for credit unions and community banks to step in and bridge the gap between consumer and banking by partnering with fintech providers, which offer an arsenal of financial technology through APIs to appease today’s financial services customers.
Open banking and using open APIs and API connectors enables traditional banking institutions to evolve quickly and provide the same type of banking experience that large financial service organizations offer. Partnering instead of competing with fintechs accelerates these opportunities.
As many software companies and organizations continue to adopt and adapt the open API concept, traditional financial institutions can shift toward fintech partnerships versus evaluating individual pieces of software.
Many financial institutions comprehend they are not as technologically able to adapt to change as fintech organizations. Therefore, many financial institutions have started to partner with fintechs that improve the customer experience with omni-channel banking, automated and robotic processing, artificial intelligence, and chatbots; as well as bank and credit union operations supply-chain services such as procurement and inventory management.
Financial institutions can easily benefit from these innovations to deliver a better customer experience and win back market share. Credit unions and banks by using open APIs can integrate fintech innovation, particularly in trending areas such of voice recognition, financial information, machine learning, payment strategies and digitalization.
NXTsoft’s API Marketplace, the premier open banking marketplace for all API needs, uses cutting-edge cloud technology to connect fintech solutions to financial institutions, ensuring that NXTsoft Fintech partners have the most secure and reliable integration environment in the industry. NXTsoft’s 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.