Will Fintech Banks Replace Their Traditional Counterparts Anytime Soon?
Financial regulators across countries are accepting applications for national bank charters, and financial technology starters are starting to queue up. That means traditional banks are in for a stiff competition. However, as far as consumers are concerned, this can prove to be advantageous in terms of lower costs and better service. The emergence of fintech has already compelled traditional banks to rethink their strategies. Simple, Varo, Chime, Moven, and other fintech banks are offering overdraft protection, direct deposit, checking accounts, and savings accounts. Renowned technology entities such as PayPal, Social Finance, and Wealthfront are contemplating on joining the bandwagon.
Social Finance is popularly known as SoFi among starters. This fintech which started its operation with refinancing student loans has incorporated a waitlist for SoFi money on its website. The waitlist is believed to arrive shortly. It will amalgamate each and every attribute of savings and a checking account and turn them into a single interest-earning deposit account that possesses at least 1% APY. The account doesn’t require a payment from your side as SoFi collects the ATM fees for six transactions on a monthly basis. In addition to that, SoFi will provide you with a free access to career coaching and offer you discounts on several SoFi products.
Finance Merging With Tech
Stash, a development company which rolled out a highly popular investing app, is now looking forward to joining the banking market, and they are pretty much keen on offering customers the potentiality to have their names on the waitlist. Just like SoFi, the bank account won’t charge you a penny, there are no minimum balance requirements whatsoever, and accessing nearly 20,000 ATMs will be made free. Stash is taking all these one level up. The bank account will have daily guidance on how to spend your money, and this is definitely going to come to your aid as far as making smarter financial decisions are concerned. Along with that, you will have the ability to rake in nearly 10% cash back on various purchases. The popular robotic advisor, Wealthfront, is all set to join the market and has recently conducted a survey to have an exact estimate of how many individuals would really be interested in opening an account which has an interest rate equivalent to that of a savings account.
Will PayPal Play A Key Role?
PayPal, a worldwide payments system, has the ability to challenge traditional banks and might even steal their customers. PayPal has already started offering all the banking benefits to its customers. The benefits include a debit card for any ATM transaction, FDIC insurance, direct deposit services, and photo check deposit. The account generally doesn’t offer an interest on balances, and PayPal will charge you an amount for using an ATM that lies outside its network of 25,000 ATMs. Those who are thinking of stowing away their money in a savings account may not be the perfect customers to avail this product. However, individuals with lower bank balances could benefit largely out of it, and the scenario might get completely changed after a period of time. They won’t have to shell out a monthly fee and won’t even require to maintain a minimum amount of balance in their bank account.
Amazon Is Stepping Up Efforts, Too
And then, there is Amazon which has the potential to intrude into a market, wreak havoc, and finally gain control over it. It’s in discussion with all the prominent banks that have been ruling the banking sector and is contemplating on creating and launching a bank account product which might suit the interests of its customers. Amazon is targeting young customers who don’t possess a bank account. Much to the relief of big and traditional banks, Amazon aims to be just a partner, rather than a competitor.
The picture is quite clear by now. The financial services sector is undergoing a revolution. Banks have begun to acknowledge that they need to wake up and shed off all the complacency that has been building up for so long. Fintechs are prioritizing 24/7 accessibility, and they are making their services available through social media to get in touch with its potential customers. It’s true that a competition between traditional banks and the new entrants may give rise to a direct collaboration throughout the entire fintech network. A few years down the line, we may see meaningful collaborations between banks and fintech enterprises. And no, banks are not going anywhere anytime soon.
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