Clients' habits have changed and they no longer want to be passive actors in their finances, but to have the power of decision in their hand, that is where FinTech enters the scene.
This by facilitating digital transformation by enhancing something that already exists but in a different way before its consumers.
Users are tired of tedious, complex and not very transparent interactions, which has made them look for alternatives to traditional banking.
The pandemic was the main cause that forced to accelerate the digitization of some banking processes in Latin America , towards a more agile, flawless and digital model.
"Not only have they had to adjust to allow what was previously unthinkable, but there is pressure between regulators, or a kind of transformation competition," commented Bac & Asociados, Director of Digital Transformation and Business Strategy, Fernán Gallegos.
Under this scenario, banks will have to take advantage of the business opportunities offered by the new digital era .
Placing the client as the center of its strategy entering a FinTech logic focused on a more sophisticated, volatile and demanding experience that wants fast and flexible solutions.
"The advantage of Fintech companies, from the beginning, was to be able to provide financial services in a more agile, digital, less expensive way and with a generally more memorable experience," said Gallegos.
Greater challenges for banking
The main challenge for banking is to develop a sufficiently robust platform that allows the user to acquire all the services offered physically in a virtual way.
Process reengineering: because it will be useless to increase the use of technologies if your processes are not agile enough to adapt to digital transformation.
However, when we refer to this we are not referring to a before and after, but rather to a sustained change focused on the client and their timely solutions. We are at a time in history where the user has greater decision-making capacity, more information and possibilities to choose.
The bank will have to look for new models, services, physical-digital connection platforms, by taking advantage of technology to save costs, streamline processes and provide security.
Better decisions based on data: Technologies such as Big Data allow banks to base their decisions on the data available to their customers.
"As the maturity process of FinTechs evolved, they realized that they suffer from something that traditional banks have and that is even more valuable: DATA," Gallegos emphasized.
This allows them to have information about what their customers buy, where they travel, their tastes, which they can take advantage of to make personalized predictions and recommendations for each user.
Making data a profitable, clear, transparent and non-invasive business is the future for banking by improving decision making through the intelligent use of data.
Cybersecurity: many financial institutions have not been able to provide an efficient response to users who have experienced vulnerability in their accounts, leading to scams and financial damage.
As if that were not enough, the response of the entities to resolve these disputes is not necessarily quick and satisfactory for customers.
To change this they will need a strategic perspective, adequate resources, and an integrated operating model to manage operational risk effectively.
In addition, they must reduce dependence on physical offices, which will translate into cost reduction, allowing them to offer a lower cost per transaction to their customers in their mobile applications.
"A highly regulated system is difficult to adapt as easily as one would like, however, COVID has accelerated the need to adopt new ways of operating financial services and regulators are no exception," concluded Gallegos.