Fintech Banks- the banks of tomorrow

Fintech bank is one such agency which can serve as an ideal substitute for banks and they have been able to prove their credibility and worth, garnering more trust from the people.

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Fintech banks a banks for tomorrow
The image showing a future growth of banks for tomorrow taken by pixabay.com

Banks have always been a fundamental guardian of our finances and assets from time immemorial. There is always a sense of security in depositing your money, however much it is, in a savings account. The kind of facilities that a privatized and nationalized bank renders is what drives people in hordes to them. However, in this world of the rat race and intense competition, different agencies are cropping up by the day that is ready to give premier banking services at a value which is more amiable and conducive. This scenario may not be very favorable for the traditional banks as such but customers benefit a lot from it as they have more options at their disposal. 

In order to pip their competitor and rise to the top, there has been a heavy remodeling of interest rates and the common man can make much more money in the process, while keeping their money secure meanwhile. Fintech bank is one such agency which can serve as an ideal substitute for banks and they have been able to prove their credibility and worth, garnering more trust from the people. In the following articles, Fintech banks have been discussed in details, covering the various agendas and companies along with it.

Fintech banks became a reality when the regulators started accepting the applications from them as bank charters. The influx is happening at a substantial amount with a number of companies like Chime, Moven, Simple and Varo already on the radar. They provide all the necessary facilities which include the protection against overdrafts, savings accounts, direct financial deposits etcetera. The big companies like Social Finance or more popularly called SoFi, Paypal, and Wealthfront are also contemplating their decision to enter the market. These companies along with other biggies like Amazon are called the Giants of the Internet because of the humongous position they occupy in the online market and the number of revenues they have at hand to invest in Fintech banks. 

The first ones to venture- SoFi and Stash

Student loans are one of the most important and integral parts of the loan system of a bank which fetches a lot of interests and is beneficial for banks and students alike. Quality education has become very costly of late, making more and more people resort to the loan option rather than shelling out a large chunk of the amount from personal savings and then paying back when earning it. Social Finance or SoFi is one such Fintech bank which specializes in refinancing student loans. They are on the top of the list as long as loanable banks are concerned and have a huge waitlist for it. The company is still working on minor agendas and promises to launch it as soon as possible, probably by the next few months. The special attribute of SoFi is the fact that it will take a checking account and combine it with the savings one and make it an aggregated deposit account. This will result in an increase in APY by almost 1%. To top that, the maintenance of the account is completely devoid of any processing fees and the company will collect its money as fees from ATM which is at a rate of 6 transactions every month. What sets it apart from the traditional banks and will act as its main USP, attracting more and more customers to them are the number of other facilities that it gives like career coaching for free, heavy rebates on other products of SoFi and 0.125% lesser rate for loans from this bank and direct intervention into events of the community which will enable them to be more financially well advised and stable. Truly speaking, all these facilities of Fintech Banks make it a very good deal.

Stash is another company that has a similar principal and agenda of functioning and wants to expand its market from the investing apps to the banking sector. They also have substantial people in their waitlist. Stash will provide the normal facilities like all other Fintech banks like no minimum balance that needs to be maintained and no processing and maintenance fee while having complete access to close to 19000 ATMS, hassle-free. However, in order to step up their game by one notch, they are going the next step forward by providing guidance for a customer’s daily spendings and earn cash back of almost 10% from merchants spread around the world. They might face stiff competition from Wealth-front who have sent experts to study the market for a bank account that will have its interest rates almost identical to a saving account but it will be a little different, like providing the facilities of depositing directly and transferring money between different accounts.

Are Amazon and PayPal going to be the game changer?

Like discussed earlier, giant online companies are the ones that have the ability to enter a market and completely own it, causing massive disruptions for the traditional banks on the way. Their biggest advantage is the chest of money that they have at their disposal. According to the reports of a journal released by Wall Street, PayPal has already offered banking services to its customers like insurance, an ATM cum debit card which will have multiple utilities, direct money deposit etcetera. However, you won’t get any interests from this kind of account. People who are looking to deposit a large sum of money and reap the benefits of interests may not benefit out of it, so it doesn’t make any sense for them. However, small money holders who want to avoid paying a monthly fee and not maintain a minimum balance as such, this can prove to be extremely beneficial.

Amazon has a similar kind of plan, though they are not exactly the same. They don’t intend to create Fintech Banks on their own. Instead, they want to partner with other traditional banks and target customers who are young and not have a bank account of their own yet. The main idea is to create an accounting product, in collaboration with the traditional ones.

As mentioned earlier, the future of banking looks bright for customers. However, signs are a little bit of ominous for the traditional banks and they may have to make some extra efforts to remain in the fray in the years to come.

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