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Fintech – A Digital Danger For Banks?

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Fintech – A Digital Danger For Banks? Internet giants such as Google, Amazon, Netflix and Spotify have radically changed the way people consume many products – from information about books, series and films to music. After the Internet revolution in the entertainment and shopping sectors, developers and entrepreneurs have now discovered the financial and banking industries for themselves, where digital progress has been a long time coming.

Whether a start-up or established company: Many companies nowadays describe themselves with the media-effective term “FinTech” (from “financial services” and “technology”). Their business models are as numerous as they are variable: Mobile payment options are just as much a part of FinTechs as online account management, loan brokerage, software for computerized asset advice (so-called robo advisors) and digital investments.

INFO! All FinTechs use internet-based technologies, customer-centred approaches and modern systems to drive the digitization of financial products. This makes them the competition for traditional financial houses and attacks the banking world.

Goodbye Bank Branches

Bank branches are therefore becoming increasingly unpopular. Among other things, current account provider N26 takes advantage of this: It advertises with innovative solutions for online and mobile banking. Other FinTechs such as Paypal, Paydirekt and Billpay simplify transactions on the net, for example through services such as instalment payments.

Generate Portfolios Yourself

Recently the bank was the first person to talk to when it came to financial advice and investments. Today the trend is towards DIY (“do it yourself”). The investor is himself: savings and budget plans, budgets and investment portfolios managed online can be generated by you using algorithms and adapted to your needs.

Will Banks And Insurance Companies Become Superfluous?

The new forms of FinTech take on many of the tasks that were previously left to traditional banks and their branches without a fight. However, after the financial crisis, confidence in banks and credit institutions waned. This is beneficial for the new digital department of the financial industry. The inhibition threshold for the user also decreases because online contracts often do not even require a signature and can be concluded from the comfort of home with a few clicks.

However, it is challenging to distinguish severe offers from empty promises or even attempts at forgery. Mostly because the industry is young and growing, the competition is fierce – and one or the other pioneer will probably disappear again as quickly as they appeared.

Besides, FinTech companies are only at the beginning: the established financial institutions with their broad base of regular customers can still work on their weaknesses and make themselves more attractive for private investors. Only then will banks be able to keep up with growing digital competition in the long term.

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