Payments innovation is 'unbundling' banking
Fintech companies identify customers’ needs better and facilitate payments in the easiest way possible and with simplified user flow. Their payment forms include just essential information and there’s no need to redirect users to external payment, or bank, services to pay.
In the last few years we have witnessed the growth of the ‘financial wellness’ movement championed by fintech startups, who aim to break monopolies over loans and transfers, and protect users from hidden charges, high interest loans and bad money management.
Banks are quickly losing their main sources of income, as consumers realize they can save time and money by investigating new payment, transfer and loans companies in the world of fintech. As this starts to hurt banks’ bottom lines over the next decade, we are likely to see more banks adopting fintech technology.
Innovative fintech startups are unbundling banking by providing individual services such as money transfers, loans, savings, financial advice and investment options, all presented in slick mobile ready platforms with great UX designed perfectly for the needs of the ‘on-demand’ generation.
Whereas people who wanted a loan used to have to put their best outfit on and grovel with the local bank manager, nowadays there are a plethora of online personal loans available from micro-lenders such as OnDeck, Kabbage, FundBox, BlueVine and Prosper and peer-to-peer lending platforms like Ratesetter.
The same goes for money transfers and payment systems. While PayPal has long offered a more affordable means of sending money anywhere in the world than with traditional banks, the service required users to link to accounts at leading banks. Nowadays a new generation of transfer services from fintech players such as Dwolla and Payoneer and leading tech companies have joined the party too with services such as Google Wallet, Apple Pay and Amazon Payments.
Innovative payment platforms offer customer centric solutions which offer a user-friendly purchasing process, with seamless checkout not solutions with multiple steps in checkout and fields to fill out. Merchants look for solutions with fast onboarding, with dead-simple integration process, innovative technology and responsive customer support which fintech startups are increasingly offering better, faster and more securely than with traditional banks.