When most people think of agile businesses adopting tech, banks rarely come to mind. For centuries, taking 90 days and more to process applications and submit approvals or denials were considered normal. Much of the application was also manual and paper-based, compelling customers to go into their local branches.
The growth of online banks changed the market and forced traditional brick-and-mortar banks to innovate or fall behind. In fact, CNBC reports that if more banks do not learn to operate like tech companies, they may not survive the new market. Some of the biggest competition banks face is from tech giants. Google Pay, Samsung Pay, Apple Pay and Facebook’s libra cryptocurrency are examples of this.
One Forbes article proposes that instead of competing with tech companies, banks should try to partner with them. This allows banks to do what they do best, while tech companies do the same. This efficient division of labor leads to cost-savings and better business opportunities for both parties involved. The banks get happier customers and tech companies get to expand their reach.
Even when they partner with tech companies, however, traditional banks can continue to expect competition from neobanks. These online banking platforms are often able to provide perks traditional banks cannot afford because bigger banks have higher overheads. Examples include higher interest rates on savings accounts and no monthly fees on checking accounts.
There is one downside to incorporating tech into the banking system. The breaches faced by some of the largest banks around the world show perfect examples of this. Current privacy laws in Europe and California may also further impact banking operations.