For those fascinated with facts, it is notable that the term “fintech” was initially coined in 1971, a couple of years ahead of America’s first ATM launch. Notwithstanding, it would take numerous additional decades before it would become a routine term. Currently, the majority of individuals are smoothly transacting with it and appreciating its advantages in their everyday routines.
Conventional banking has undergone a complete makeover, to the extent that this author is surprised to never have possessed a chequebook, once considered a fundamental symbol of maturity. For the coming generation, everything is digitised and a bank is viewed as a mobile application rather than a tangible building where one goes for transactions.
David Kerr, the initiator of comparison site Bonkers.ie has witnessed the subtle shift in consumer perspectives towards digital-only banks (neobanks) in recent years, as their stature swells with impressively growing clientele numbers. For instance, Revolut has gathered 2.7 million grown-up users in Ireland. Nonetheless, many among these clients use it as an auxiliary account, maintaining ties to banks that provide some level of physical existence and human contact.
According to Kerr’s observations, this preference stems from a general sense of caution rather than faithfulness to conventional banks. He remarks, “There’s not so much allegiance involved as a psychological adjustment in perspective towards money — which is data — and towards what a bank represents — a mobile app”.
He is of the view that with neobanks now offering an extensive range of services such as personal loans, credit cards, instant-access savings accounts and Irish IBANs, younger clients — like Revolut’s 400,000 users under 18 (who operate their accounts via a connecting adult’s account) — might not consider opening a conventional bank account in the future.
Kerr adds, “They might not differentiate between a neobank and a ‘traditional’ bank. Their choices might be more influenced by the appeal of mobile applications than the presence of a physical branch network”.
There’s an anticipation that artificial intelligence (AI) will introduce further disruption to the sector in upcoming years. Benedikt Voller, the chief revenue officer for Raisin, an online platform that links consumers with affiliate banks globally to take advantage of the best obtainable interest rates for their savings, predicts AI may progress from aiding in financial decisions and automating customer services, to independently managing all-encompassing financial systems within the next ten years.
The integration of advanced Artificial Intelligence (AI) systems, capable of real-time prediction and response to market shifts, customer patterns and regulatory amendments, will transform tasks such as dynamic risk assessment, asset management, financial modelling and fraud detection. These will not be operated on separate platforms but unified under centralised AI, as stated.
Additionally, AI and big data are envisioned to enhance personalisation in banking services, altogether mirroring customers’ financial dispositions. With more of our activities shifting online, there is an increasing scope for big data to transform an unlimited digital scene into a highly customised sphere facilitated by companies utilising in-depth client categorisation.
Currently, the focus in the sector is on the potential invigorated by embedded finance to eradicate boundaries between the finance industry and other sectors. This allows consumers to conveniently utilise financial services without requiring distinct banking or financial apps. This arrangement proves beneficial for fintech firms, simplifying customer use of digital wallets and other fintech modes of payment for online transactions. This includes services like zero-interest loans at checkout, intuitive single-click payment apps and the provision of company-branded chequing accounts and debit cards for principal users.
The capacity for digital currencies to boost banking access in emerging economies is a proven yet growing concept. As Voller expresses, affordable digital cash and mobile payment systems could introduce financial services to the 1.7 billion individuals presently without conventional bank accounts.
This view is shared by Louise Kelly, an executive of Ibec’s Financial Services Ireland group. The introduction of fintech acts as a pivotal opportunity to equip these unbanked or underconnected individuals, particularly in growing economies. Driven by the surge in mobile phone use in these regions, mobile money is at the forefront. Fintech firms are designing mobile platforms for transactions, money transfer and even micro-savings, consequently promoting economic involvement and inclusivity.
Kelly believes that the Republic is well-positioned to gain considerably from the convergence of technology and financial services companies in upcoming years. She thinks it has a vital role in devising these solutions and with the correct facilities, Irish financial services companies are expected to perform a larger part in the next decade in transforming global financial management.
Even so, she doesn’t foresee the downfall of traditional banks, viewing them as a necessary element of the financial infrastructure.
“Her belief is that the thorough comprehension banks have of the economic landscape combined with their unyielding dedication to the customer journey, secure their standing. Moreover, she emphasises the significant part banks are set to take in financing the green shift, given their enormous resources – crucial for a planet-friendly future.
At the same time, Kerr isn’t prophesying the downfall of conventional banks in the near future, though he prudently suggests they might need to seek partnerships with advanced technology firms. “The size of Irish banks are relatively small in comparison to other European financial institutions and technological enhancements aren’t inexpensive, adding a significant threat to Irish banking institutions. They basically bear all the expenditure related to security and technology of larger banks, however, without an extensive customer base to fund it,” he articulates.
Given that the closure of branches has sparked uproar, Kerr’s perspective is that banks must shift their focus from solely reducing costs to broadening their range of services in order to secure their future. “A reimagining of their roles within the consumer monetary orbit will be vital – expecting to see their brands being stretched not only to daily banking activities but also reaching further into financial services either as primary suppliers or technological facilitators.”