Back in the day, there was only one way to do your banking. If you had some notes to pay in, a transaction that needed to be authorised or a financial service which you needed to get set up, turning up physically at the teller’s desk in your local bank was the only way to do it.
Fast forward to the present day and the world of finance has changed dramatically. Not only do many banks across the world now offer instant services which are accessible in just a few clicks, a wide range of challenger financial brands have stepped up to the plate to take on the dominance of the banking sector and offer their own range of financial services.
In this post, we’ll take a look at how money management apps are changing the face of retail banking.
The challenge: emerging fintech firms
You’ve heard about it on the radio, read about it in newspapers and may even be dabbling in it yourself. But what exactly is fintech, or financial technology?
The world of fintech is revolutionising how we do our banking business, and as consumers we all stand to benefit from the traditional banking world being blown apart by technology.
The term covers the host of apps and websites which have sprung up in recent years to help you manage your finances, such as Monzo, which now also offers actual current accounts in addition to its handy money management app.
Think back to how different it was 30 or 40 years ago. Imagine, say, that you received a large lump sum and were unsure where or how to invest and manage it. Unless you were in the very small group of people who worked in finance, making an appointment with a bank manager down at the local branch would have been the only option open to you.
But now, there’s a whole host of choices available to you if you want to manage cash online. Many fintech apps, for example, allow you to add your preferred appetite for risk and your financial aims into a system which then generates bespoke investment choices, and you can manage it with just a few smartphone taps. And with leading investment lights like Phillip Nunn showing a clear interest in online services, it’s clear which way the wind is blowing.
Banks are playing catch up
For a long time, British retail banks felt like they could do no wrong. In the aftermath of the bank bailout of 2008, there was a real sense that nothing could possibly befall them and that they were, in short, invincible.
As a result of this sense that they cannot be assailed, many banks found themselves feeling like it was unnecessary to invest in consumer technology. After all, if you know you’ll receive a government bailout worth many billions of pounds, a tiny challenger fintech brand would hardly seem like a threat.
But that’s now changing. Retail banks are starting to see the threat that these challengers are posing, and they’re taking steps to do something about it before it’s too late. Many banks, for example, now offer comprehensive mobile apps which allow you to budget, save and much more. HSBC’s app, for example, takes information from the customer’s account data and works out a handy monthly spending figure for them to adhere to.
For many banks, though, it’s a race against time. Because of continued technological underinvestment by retail banks, money management apps have surged ahead – and it’s a case of playing catch up.
Other sectors, though, can benefit from the mistakes of the banks and the fintech revolution – and not just in terms of improved financial management tools for their businesses. By reminding themselves that technology is quickly changing, they can get their priorities straight and make sure that they too offer a seamless tech service to their customers.