Even though fintech is evolving over time with the use of advanced technologies to be the leader in financial services, it is also time to admit that the individuals, businessmen, and corporations are worried about the question "Will fintech disrupt commercial banking?"
Delving further into the subject, fintech has improved things, making them easier and better. The evolution of fintech happened because of the use of advanced technology, the latest techniques that will make personal finance management easier and more accessible. However, Gen Z and millennials were the vital reason for fintech to become a huge success. But will it replace commercial banking is the question that is being raised in everyone's mind.
Digging deeper, it is also observed that JP Morgan Chase CEO Jamie Dimon admitted that Fintech would be an enormous competitive threat to Banks. But is it that easy for Fintech to replace the banks? The answer is a big NO. Keeping the development and evolution of fintech aside, JP Morgan also acquired a fintech company named Renovite technologies to fend off threats from fintech. JP Morgan also said that the acquisition would develop the next generation payments processing platform globally.
So, it's more about collaboration over competition between banks and fintech. However, fintech also lacks the necessary regulatory infrastructure to replace the commercial banks. Furthermore, while commercial banks find it relatively easy to attract customers, fintech companies face greater difficulty in doing so.
Let's put it this way, think of a person who lives in a rural area. It is obvious that the person will be inclined to choose banks over fintech because of the reputation and the trust that the banks have. However, this does not imply that banks are continuing to utilize outdated technologies. Banks are updating everything to make things easier and better.
To give an example, HDFC bank utilizes a number of emerging technologies including AI, cybersecurity and cloud to improve operational efficiency, reduce costs and improve services offered to its customers.
In conclusion, the evolution of fintech has transformed the financial landscape. However, rather than seeing fintech as a competitor for the commercial banks, it could be a collaborative work of banks with fintech which could drive greater economic expansion. Despite the progress fintech has made, the basic fact remains that traditional banks cannot be completely replaced or fully disrupted by fintech.