FinTech applications have become immensely popular in the last few years. The latest innovations have revolutionized traditional bank services. The discussion related to FinTech vs traditional banks has become prevalent. Nowadays, FinTech app development companies offer some of the most budget-friendly and feature-enriched FinTech app development services. Numerous financial institutes and organizations have been digitizing their banking services and striving to provide versatile wealth management techniques.The banking, insurance, investment, and online payment industries stand out in terms of modifying their traditional services and providing customers with a digital platform. Indeed, the FinTech industry offers more benefits than traditional banks. For the last few years, people have chosen mobile applications for every small and big business. The government has also come in and transformed the way people used to handle their finances.A detailed analysis of FinTech vs Traditional Banks will let you know about the significant difference in operation and management. Before that, let’s look at the market analysis, learn about the finance industry, and understand why it is better to hire FinTech developers nowadays.
In the last few years, the world has witnessed the immense growth of FinTech startups. Undoubtedly, the flexibility, high performance, agility, and versatile financial services attract users to FinTech startups. Let’s look at what the market says about the future of FinTech firms.
- The study shows that North America has the highest number of FinTech startups as most people prefer online payment systems over physical cards and cash.
- As per the reports published in May 2023, the global revenue of the FinTech industry has reached a value of USD 169.32 billion.
- The study shows that the digital asset market revenue will witness a growth of 33.6% in 2024. The total users of the digital payment market is expected to reach 5.48 billion by 2027.
- Digital investment with AUM (Asset Under Management) will be the largest market in the finance industry worldwide with USD 113 billion in 2023. The key regions that this study covers are the United States, China, Japan, Asia, and Europe.
FinTech Vs Traditional Banks: The Significant Difference
The FinTech app development company offering technology-driven, cost-effective, and client-focused FinTech app development services is in demand. The way FinTech apps have evolved the complete functions for banks and financial institutions. Let’s look at the ways FinTech applications have transformed the traditional banking system.
Service Delivery Strategy
FinTech applications have simplified the complex banking process. Now, people can just log in to the online mobile payment system and manage their finances. From overseas transactions to handling investing and accessing various types of banking facilities, FinTech apps offer cost-effective and efficient solutions for users so they can manage their bank accounts from the comfort of their homes.Continuously updating mobile banking applications is another challenge. If the banks don’t update the mobile apps, the banking services can pose a hindrance in delivering quality. It can result in low performance and weak customer experience. Traditional banks need to update their bank applications regularly. In addition, resolving legacy system issues, building new in-app functions, and delivering FinTech services better with the continuous evolution of technologies are some considerable factors. Technological evolution favors FinTech applications in the FinTech vs Traditional Banks discussion. The new technologies that offer enormous opportunities for developing unique FinTech mobile app services include Big Data, Artificial Intelligence, Machine Learning, blockchain, and Cloud Computing, among others. Now, people do not need to go to banks and submit a physical application for financial help. The in-app features and customer support services help people instantly. Therefore, from crowdfunding and P2P services to insurance, loans, and online account management, FinTech applications offer streamlined solutions to users.
In the FinTech vs traditional banks discussion, the difference in regulations is another significant parameter to consider. Traditional banks operate by the rule book and follow strict regulatory guidelines set by the RBI and the government. Every traditional banking system must follow related guidelines, rules, legal obligations, restrictions, and more. Sometimes, these things make the banking operation a complex and time-consuming task.Further, sometimes, the banking operations become expensive for the people as they are under the control of one entity. The FinTech app removes the need to meet numerous banking professionals and the requirement to spend hours even for the completion of simple things. Within a few clicks, customers get to know all the requirements, processes, and guidelines they need to follow. In the FinTech vs Traditional Banks discussion, the simplicity, easy adaptation, user-friendly design, simple navigation system, agility, and flexible processing make the FinTech applications alluring. In addition, users can access their accounts, fill up forms, open accounts, monitor investments & update information at any time, even after banking hours. Secure FinTech applications help prevent financial crimes, such as frauds, scams, money laundering, KYC frauds, and more. Nowadays, people do not need to keep their physical cards, such as ATM cards and debit/credit cards to themselves all the time.
Target Audience and New Technology
With the evolution of new technologies, the FinTech industry seems to be in profit. The FinTech app development company offers new features in its FinTech app development services. The FinTech app company can easily upgrade its system, offer new features in its application, and reach its target audience faster. When discussing FinTech vs Traditional Banks, staying updated with the new inventions and delivering them to customers in less time becomes a challenge for the traditional banking system. Traditional banks have been evolving and offering numerous technology-driven solutions to their customers. Still, the demand for creative FinTech applications has not seen depletion. Traditional banks offer several banking services on their web and mobile apps, such as mobile payments, seamless fund transfer, account management, online loans, digital security, and more. Therefore, it is sufficient to say that traditional banks have started adopting new technologies and updated their legacy system. This adaptation has significantly benefited customers in the end. As people are becoming more tech-savvy, the customization and updation of digital banking services are taking place.
The finance industry is one of the most volatile industries worldwide. It is prone to risk even though everything seems to go smoothly. Building FinTech app ideas, hiring a trusted FinTech app development company, choosing budget-friendly FinTech app development services, and developing a customer-centric & competitive FinTech app is an even bigger risk. Several applications offer attractive offers, discounts, financial services, and wealth management planning to customers.In the FinTech vs Traditional Banks discussion, traditional banks need to up their game to compete with the FinTech applications. Indeed, the future of FinTech applications is promising and has enormous scope for growth. FinTech app companies do not hesitate to take risks, update their system using new technologies, offer flexible systems, and reach their target audiences fast. No strict regulations and guidelines on the FinTech app companies help them take more risks and transform their services.On the other hand, strict regulations, rigid guidelines, and several restrictions tie the hands of traditional banks. When it comes to risk factors in the discussion of FinTech vs Traditional Banks, traditional banks find a way to lower the risk while delivering financial services through mobile apps and marketing it to their target audience. The legacy infrastructure and competition also play a huge role in developing new finance services through mobile applications. Overall flexibility makes investment in FinTech applications riskier than the investments in traditional bank services.Now you are aware of the factors that showcase how FinTech applications are different from Traditional Banks. When it comes to FinTech vs Traditional Banks, investors prefer FinTech projects for investment. If you have a FinTech app idea, hire FinTech developers from a renowned FinTech app development company. The young generation also prefers to manage their finances with the help of FinTech applications. It’s also a plus point if you want to be successful in this highly competitive finance industry.
How Are FinTech Apps Transforming Traditional Banks?
Both FinTech apps and Traditional banks are the representatives of financial services. They provide users with a secure digital medium with the promise of growth and financial security. Another factor that people must consider is no platform is completely safe from fraud and scams. FinTech app companies and traditional banks strive to deliver a user-friendly, robust, and scalable application platform that functions well on all platforms, such as web, Windows, mobile, MacOS, etc.The discussion of FinTech vs Traditional Banks also has a huge impact on the evolution of traditional banks. Traditional banks have been primary agents for governments and financial institutes to deliver various financial services. For many years, they have played a significant role, stayed relevant, and sustained the volatile market. With FinTech applications, customers enjoy several non-traditional and modern financial services, along with traditional bank services.The advanced categories that attract customers to FinTech apps are Blockchain, digital lending, wealth management, expert guidance, informative blogs, market trends & news, instant payments, global market reach, and more. Undoubtedly, many factors contributed to making FinTech firms a main competitor to traditional banks. Other parameters that contributed to the success of traditional banks are seamless navigation, speed, customization, relevance, and quick delivery.It took traditional banks a little more time to digitize their services, modify legacy systems, attract their target audience, and provide seamless delivery. Mobile applications and continuous upgrades using new technologies have helped traditional banks streamline their complex services and transform their traditional financial services.
Q1. In the FinTech vs Traditional Banks, state the similarities.
The new generation seems to choose FinTech applications over the traditional banking system. Several factors contribute to the matter, one of them being flexibility and simplicity. FinTech applications are not burdened with strict rules and have the privilege of offering more versatile financial services than any traditional bank, apart from services offered by traditional banks.The similarities between FinTech and Traditional Banks include the financial services they offer. Some of the most prominent finance services they offer are saving account management, loans, instant payment processes, etc.
Q2. Will FinTech firms take over the Traditional Banks completely?
For the last few years, FinTech firms have established themselves as a promising alternative in the finance industry. Traditional banks have also evolved and given tough competition to these FinTech companies in more ways than one. Both traditional banks and FinTech firms have similarities and differences, which keeps them relevant to this day.It would be ignorant to say that FinTech firms will take over the traditional bank completely and replace them. Traditional banks have always been a preferable choice. They have been in this game for centuries, offer low-risk investments, and provide valuable expertise.
Q3. Is it possible for traditional banks and FinTech firms to work together?
Traditional banks and FinTech firms work to serve users with financial services. Both financial platforms use diverse methods to deliver relevant financial solutions. With the personalized FinTech experience, bank expertise, security, and many other ways FinTech firms and traditional banks go hand in hand.
Q4. Name some popular FinTech firms in India and overseas.
A lot of FinTech firms have come to market with their unique financial solutions and services. Stripe, PayPal, Revolut, Wise, Robinhood, Square, Chime, Paytm, Brex, PhonePe, Affirm, Carta, CRED, Avant, Coinbase, Plaid, etc., are a few prominent FinTech applications transforming the finance industry and revolutionizing traditional finance services.
Q5. How much does it cost to develop a FinTech application?
However, the overall cost depends on several factors. It is not easy to determine the exact FinTech app development services cost. Consult a trusted FinTech app development company, hire FinTech developers, build a robust business plan, and study your competitors to get your budget range. Usually, the efficient FinTech application budget ranges from USD 25,000 to USD 35,000 with all the basic features and functions.
Q6. FinTech vs Traditional Banks: Who is more secure?
Financial Security is the primary feature every FinTech firm and traditional bank considers. Traditional banks follow strict guidelines, numerous regulations, and a rigid structure that guarantees low risk and better security. On the other hand, FinTech firms enjoy flexibility, less regulations, and high risk. These FinTech applications also offer high returns over a specific period.