When people think about how the banking and finance industries have been disrupted by technology, they often think about online transactions, internet banking and new non-traditional online banks. However, the way technology has disrupted the banking industry goes a lot further than that.

Fintech companies started appearing in a time where globally, people were losing faith in traditional banks following a spate of scandals, while a new generation of people that grew up with and therefore trusted technology more, expected their banking experiences to be quick and digital.

This opened up space for new companies to offer more tech powered banking options, catering to consumers who desired better banking services, more flexible payment methods and access to financial advice at scale.

So now that it looks like Fintech companies are well and truly leading the way in setting the standard for how banking and finance providers should be incorporating technology into traditional business models, what are some of the key changes we have seen to traditional banking services, and who are the companies to keep an eye on?

Personal finance:
Looking at the changes in the personal finance sector, N26 is a key player. N26 digitized the banking system through a 100% online platform with no attachments to a physical, offline bank.

N26 also disrupted the traditional banking customer service experience, by replacing bank tellers with a chatbot. However, conscious that customers still want a personal touch, users can opt out of the chatbot to speak with an actual customer service representative via a messaging service. This allows customers to get more immediate responses to their questions or concerns, without the hassle of a banking appointment.

Furthermore, similar to N26, Revolut joined the online banking trend, offering customers who work internationally, such as digital nomads, the option of an online banking service across multiple countries. Customers can use their prepaid debit card, currency exchange, cryptocurrency exchange and peer-to-peer payments without any fees, wherever they may be based.

Payments/billing:
Companies such as Klarna are personalizing the payment experience of their customers by allowing them to decide how they want to pay their purchases: pay when you buy an item, pay later or even pay in different rates over a defined period of time.

This gives an important freedom to the customer and opens a new dimension of payment for people that would not be able to afford a product in one purchase, and offers flexibility that a traditional bank’s payment and credit options may not provide.

However, after seeing the success of such companies, it is interesting to see Nordea Bank merging with Divido; a financial technology service company that offers quick lending from its platform. Divido is a challenger of Klarna, as it also offers clients the option to pay for their goods later, but in contrast to Klarna, Divido focuses more on banks and merchants.

Money transfers:
Banks are anticipating the pressure of fast and easy money transfer coming from fintech companies. Not only do banks like N26 and Revolut offer instant payments to family and friends via a phone number, but other companies such as PayPal and Venmo are allowing customers to make payments or purchase goods from a variety of sources.

Nowadays, PayPal is one of the world’s most popular online money transfer platforms, allowing users to transfer money from peer to peer via only an email address, while Venmo enables people to make and share payments by linking their bank accounts or using their money on their Venmo account.

Lending:
Lending money has always been a slow and complex issue, and it feels like nearly everybody has experienced the trouble of trying to get a loan from the bank.

Therefore, fintech companies have once again disrupting the standard lending process of banks.

Companies such as Lendico are creating marketplaces for lending and alternative underwriting platforms, enabling easy and fast lending due to its platform of peer-to-peer lending. 

In fact, Lendico, founded by MVP Factory Co-Founder, Philipp Petrescu, was acquired by ING-Diba to increase their penetration in lending to small and medium-sized companies.

Regtech:
“RegTech” current buzzword majorly promising in the financial sector.

According to Deloitte, RegTech is the "new fintech of tomorrow", promising to disrupt the regulatory landscape by providing technologically advanced solutions to the ever increasing demands of compliance within the financial industry.

Many Regtechs are appearing in the regulatory reporting, risk management, identity management and control, compliance and transaction monitoring fields.

NetGuardians created their own AI platform that offers fraud prevention services. In fact, it has become a necessity for banks to implement a software to detect any suspicious transaction or account that could be a sign of fraud. NetGuardians integrates directly the software in the bank’s system.

So where does the banking industry go from here?

Both traditional and non-traditional banking providers are increasingly recognising that customers will go for banks that offer them convenience, security and flexibility, and that technology is a key driver of this.

As competition in the banking industry grows, financial technology enables innovation and transformation, but yet technology alone will not determine success.

Instead, banking service providers must look at the key trend that underpins all of these recent innovations: a desire to change the way the industry operates, in order to provide better service for customers.