A couple of years back, startup companies were able to gain capital for financing by going to financial institutions and asking for a loan. This is no longer the case as there are new ways of doing these things since the banking crisis of 2008.
During that period, banks all over the country were failing and this led to the emergence of new start-up finance companies. Tech experts were quick to observe that a change was needed in the financial and banking system. As soon as they identified that need, tech companies started making gradual changes in the way people manage their finances and banking needs.
With this in mind, here are some of the moves taken by the tech companies to change banking solutions and alter the business procedures of people, banks, and companies:
1. Develop Mobile Apps
These days, it is easy for consumers to use their cell phones to sell and purchase stocks and bonds. Many of the banks have made provisions for their customers to use banking software and gain entry to their financial accounts by connecting with a mobile-based app. Due to the stable and steady connection available today, coupled with the flow of information from the financial services industry, a lot of people are now getting more opportunities for accessing their financial accounts online.
These new additions make it easier for customers to be closer to their banks, and this has turned out to be beneficial because the greater percentage of customers in the finance industry are individuals within the millennial generation range. These customers always prefer to have direct dealings and greater control over their finances.
2. Provide Faster Access
Tech companies have created several methods that make it easy for customers to connect to their financial data, anytime and anywhere. This is the foundation of online banking. These solutions are put in place to ensure that consumers can make speedy transactions. It even helps them to carry out their business, do their invoicing, confirm financial data and make faster transactions with both lenders and other businesses than in the past.
3. Focus on the Social Component
Companies are doing businesses by taking advantage of the close impact that social media has on people's lives. Many businesses give out incentives and open their communication channels to make customers relate with them freely and personally. This goes on to strengthen the personal relationships that customers have with financial service companies, which makes consumers appreciate them more and even make referrals to their family and friends.
Many tech companies have taken to social media platforms as a way of achieving real-time communication with their customers. It also enables them to assess the risks that consumers go through.
In fact, banks that operate globally have created options for people to open a limited account just by using only their social media profile. Some financial institutions are beginning to use social media as a tool for determining how qualified a person is to receive funds.
4. Offer Cheaper Alternatives
For a long time now, when people come to borrow from banks, they are greeted with high-interest rates. This is because banks need to get more money to bear the costs of the expensive overhead. However, some methods have been created by tech companies so that both lenders and investors do not have to bother with a brick and mortar location. This has paved the way for the entrance of new capital sources and these ones even provide good interest rates that are better than what traditional financial institutions can give out.
5. Providing Automation
For many people, life is becoming increasingly busier every day and they may even go to places where it becomes difficult to find a brick-and-mortar location to do financial transactions. Some people are in the dilemma of choosing between an accountant vs DIY due to the increased need for convenient solutions in handling one’s finances.
With the introduction of automated services, consumers can now do things like paying bills, saving, purchasing or investing funds and other things. This saves them time because it is no longer necessary to repeat manual tasks over and over. It also becomes easy for the businesses and financial institutions to predict some aspects of a consumer's transactions.
6. Access to Data
The role of technology in businesses cannot be overemphasised. With the help of technology, businesses have quick access to information that will allow them to make better sales. Some businesses even have issues with organising their payroll. Hence, strategies on payroll hacks for SMBs come in handy, especially if you don’t have enough overhead to manage all the aspects of this process.
Using the appropriate technology, a business can use real-time tracking solutions to find out which marketing strategies to continue and which to discard. With this kind of information, businesses can now choose to invest their funds only in places where the interest accrued will be high.
7. Gain Funds from Various Sources
Banks are gradually phasing out with the advent of crowdfunding efforts and peer-to-peer lending. The banking industry has gone beyond the crisis that occurred in 2008, but it still learned its lessons to no longer make risky investments.
Even when there are enough funds to lend out, banks have developed stricter standards and regulations. This means they are very unlikely to lend funds to any individual or organisation with no strong financial capability.
With peer to peer lending in the picture, private individuals are able to lend and borrow funds after making agreements and conditions and this totally removes the middle man. With crowdfunding, individuals can now come together to raise money and help build startup companies.
8. Offer Customisation
This current period has given birth to a financial trend that involves giving customised options to consumers for a personalised experience. This is owing to the realisation by tech companies that there is no one-size-fits-all solution in financial products.
When consumers are allowed to pick their own options, it becomes possible for them to realise that they can integrate their services across different platforms. Consumers get to decide concerning the information they get. With technology, consumers can now make comparisons of costs and prices across the board so they can make better investment decisions.
9. Ensure Transparency
The financial sector is becoming more transparent thanks to the innovative solutions that technology has given rise to so that consumers will not make poor financial investments. The tech companies now understand that financial services providers are supposed to be more open with their customers and want to make this happen.
They made some terms clear and explained them in plain English so that the borrowers and lenders can understand each other better. Consumers are even able to upload financial information with special software and online tools, which also allows them to get orders from potential lenders concerning loans and mortgages. The consumers see everything clearly because they can now compare conditions and rates.
10. Measure Risks
When a person is about to make a big financial decision, there are ways by which that individual's risk tolerance is determined. The software analyses individuals risk tolerance levels and then offers a list of bonds, mutual funds, and stocks that will suit that individual.
Tech Companies Will Not Relent In Their Revolutionising Efforts
As time goes on, tech companies still make efforts to find solutions to problems that are already on the ground. They’ll try to help in business expansions and connections all over the world at no extra charge. With today’s solutions available, it is crucial to adapt to the growing benefits one can gain from technological advancements in the banking industry.