While I mentioned the huge growth of Chinese fintechs in a previous blog, I didn’t want to take away from the enormous growth that the US has seen in the fintech sector. In recent years, dynamic growth has not only presented consumers with new products, but it has also driven change across the entire US financial industry.
A recent study by EY Financial has shed some light on the biggest factors for fintech growth and their effects on the future of commerce in the US. Here is one of many takeaways:
From Disruptors to Valid Competitors
In the US, Fintechs are no-doubt still seen as disruptors to the financial system. But in recent years, their position has shifted from unproven startups to valid alternatives to traditional financial institutions. The competition presented by fintechs is unique, as many banks and fintechs alike provide multiple services. Most consumers who have adopted fintechs or are willing to state that they also currently use traditional bank services. The change comes when they need a new service, they are willing to look at fintechs before their current banks.
The reasons that users are willing to seek greener pastures range, but some of the most common are that consumers want to find a better rate and can more easily compare rates, they want the availability of digital services, and that they want a one-stop-shop for their services. Fintechs make bundling services more simple, especially when they streamline the application process with the personal info they already have.
Before the recent growth, the single largest reason for users adopting fintechs over traditional banks was the ease of use and innovative products. Now with more data backing them, fintechs are able to offer cheaper products and more attractive rates than banks, and consumers can sign-up from their couch, rather than finding a branch during banker’s hours.
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