How FinTech is changing the face of banking
Money makes the world go round
The banking sector comes under immense scrutiny on a daily basis. Rightly so – any institution in charge of our money is a serious business. Luckily, banks and other financial institutions take their tech just as seriously.
In fact, technology is changing the very face of banking. Who we bank with, how we bank with them, and what happens to our money once we’ve banked it, is all changing thanks to tech.
So what does this new face look like?
Putting the Fin in FinTech
FinTech is big label (check out our recent FinTech for Dummies blog for a breakdown) and covers everything from insurance to investments. However, at its heart lies banking tech.
Despite challenges with Brexit and government changes, UK-based FinTech startups attracted over half a billion dollars of investment in the first half of 2017 – a rise of 37% from last year – and global FinTech investments doubled to $8.4 billion in a single quarter. A sign that technology has found itself at the heart of the financial world.
While blockchain and bitcoin have turned into headline grabbers when talking about FinTech, it is banking that is really putting the fin in FinTech.
Just look at challenger bank Monzo. It officially gained its full, unrestricted banking licence from UK regulators earlier this year, and can now hold customer money and offer current accounts. All online, it has built its own banking software so your account can just live on your smartphone.
With high street banks shrinking in size or closing completely, the rise of app banks like Monzo and Atom is bringing a dawn of banking for the future.
One area that new and traditional banking institutions have in common is the potential for fraud. As we move more and more of our banking online, and the introduction of contactless cards and mobile payments, is opening consumers up to a new level of crime.
As we shared in our previous blog, cybersecurity is becoming a real issue for modern day banking. Luckily for us, whilst tech might be part of the problem, when it comes to cybercrime it is also part of the solution.
Previously, banks placed a heavy focus on how it dealt with fraud after the event. However, they are now investing in technology that predicts fraud and data breaches before it happens.
According to research by the US Federal Trade Commission (FTC), it takes just nine minutes for stolen card and account data to be used on the dark web. Now compare that to the fact that current processes can take around six to 18 months to recognise and alert banks to data breeches and you can see just what can happen to our money.
Now Mastercard is stepping up by launching its new “Early Detection System” to determine to high-risk cards and accounts that have been exposed, and sends an alert to the bank, quantifying the level of risk. This enables the bank to make the right choice of action.
Identifying active criminal trading of account data, or identifying cards being tested prior to being used for fraud, or account data that appears to be at risk, can help put the banks, and ultimately the consumer, back in control.
A new ATM
Can you believe that ATMs turned 50 this year? That’s right, in 1967 a new way of withdrawing money from the bank was born. They were revolutionary, exciting and a technological wonder.
Now they have become a mainstay in modern life. Dutifully doing the job we need them to do (unless they run out of money!) Whilst they have been “tweaked” over the years, the main concept of ATMs has remained the same… until now.
ATMs are the next element of banking to be given a bit of a tech overhaul.
A mixture of customer convenience and fraud protection is driving a new wave of ATMS.
Larger, digital, tablet-like screens will be the norm soon, and consumers will no longer need to speak to an actual staff member as ATMs grow in ability, but it will be how we will withdraw our money that will see the most technical innovation.
We already can’t live our lives without our smartphones, and now it could be in control of our cash too. Entering your PIN, along with a code provided via the bank’s app will enable you to withdraw cash with your smartphone rather than your card.
Already adopted across the globe, this technology is expected to reduce criminal activity like card-skimming, at the ATM. However, it doesn’t stop there.
China is now trialling facial recognition software and will be expected to stare into a camera for six seconds to verify their identity with facial-recognition software. It won’t just be facial recognition we will need to get our hands on our own cash.
Research is suggesting that revenue generated by fingerprint, voices, and irises scanning hardware and software is expected to reach $15.1 billion by 2025.
Banking is changing
There is no denying it. Technology has infiltrated the traditional and brought it up to the modern.
Breaking into the bank safe will be a crime of the past, but do we feel safe with this new way of banking?
The face of banking is changing, but only time will tell if it will lead to a face-off with customers. One thing is for sure, technology is looking after our money now.