BANKING

The landscape of traditional banking has changed substantially.  With the competitive rates offered by credit unions and the multiple options and concepts offered by online banks,  this industry is far from traditional.  Even with the significant changes that have occurred within the banking industry, there is still more change on the horizon. 

Fintech collaborations with banks will continue to increase.  Fintechs—short for financial technology—are companies that utilize innovative technology to conduct fundamental functions provided by financial services.  This technology improves the effectiveness and efficiency of how users store, save, borrow, invest, move, pay, and protect money.  The technological trend will result in the consolidation of fintechs, non-banks, and small banks into big banks.  Mid-market mergers will necessary to leverage assets and talent. 

Digital lending had a market size of $3.5 billion in 2018 and has been growing at a compound annual growth rate of more than 20%. Business-to-consumer (“B2C”) and Business-to-business (“B2B”) lending continues to expand online.  Neobanking which offers digital-only banking services and solutions continues to attract millions of customers nationwide.  Automation will continue to eliminate resources that are consumed by repetitive processes. 

Blockchain technology and decentralization which enable nearly instant peer-to-peer transfers of money are enabling lending platforms that exclude the need for financial institutions.  This trend is expected to dominate the financial services industry in the next decade. 

The fees charged to unbanked and underbanked consumers are still astronomical.  Fintechs will eventually eradicate this inequity.  Big banks are extending services to small businesses, an underserved market by banks.  Most importantly, there has been a reemergence of relationship banking.  More personalized banking relationships will be more critical to the long-term success of banks. 

As a consumer, you should capitalize on the evolution of the banking industry.  Assess and evaluate how much you incur in banking fees and surcharges to maintain an account with your business and/or personal bank(s).  Does your banker know you?  Can you transact business over the phone, or do you have to appear in the bank in-person?  Does your bank satisfy all your banking needs, or do you have to use other entities and institutions to transact business?  

To schedule a consultation with Nicole Michelle, feel free to connect with her on the Home Page.

Nicole Michelle 

Finance and Money Wiz 

February 29, 2024