To ease the process of monetary transactions, mobile financial services started their journey in Bangladesh sometime around 2010. Since then, the Fintech industry is on a boom due to its widespread popularity. Never has technology been available to so many people so cheaply. More than 50% of the population of the country don’t have bank accounts and aren’t accustomed to the traditional banking system. These people took resort to mobile financial services for easy and rapid money transfer. In Bangladesh, the MFS (Mobile Financial Service) is the finest combination of finance and technology. E-commerce channels of the country rapidly adopted this new technology for their transactions.
The rise of Fintech in Bangladesh has compelled the banks to rethink their tech investments. The banks were frazzled with the sudden rise and popularity of this service. But Fintech and banks stack up their own limitations. Both of these industries also seem to have issues that can be addressed with the help of one another. In these modern times, banks and fintech services should think of building a symbiotic relationship to overcome each other’s constraints.
The fintech industry is a comparatively new industry. As such, they don’t have as much of a loyal customer base as banks do. With much longer tenure, banking firms have built a relationship of loyalty and trust with their consumers. Their customer acquisition strategy isn’t as robust as that of the banks. The Fintech services also struggle in terms of raising capital. Due to lack of expertise, it becomes cumbersome for the industry to manage and mitigate risks. Furthermore, Fintech services don’t have much of diversification in terms of their product. Banks have hundreds of schemes and products which cater to the individual needs of the customers and provide them with many alternatives to choose from.
Although the banking industry has a history of around 200 years, the industry still runs on veteran practices. The main issue with most banks is their unwillingness to incorporate technology into their services. Most banking firms in the public sector don’t have a clear digital strategy to make banking services easy. Even if there is tech inclusion, the process is flawed and inconvenient. An ongoing challenge in the banking industry is also the legacy technology systems that date back years. Banking firms also have a struggle with an old organizational structure which prevents them from hiring technological talent. Banks do have a loyal customer base but with the rise of the millennial population who seek easy measures everywhere, banks are at risk of acquiring new customers.
The banking sector has almost no reason to be threatened by the Fintech industry. Experts say that, even in the next 20 years, the growth and market share of the banking industry will surpass that of the Fintech. Fintech has a sophisticated and unique technology and can help banks in product innovation. Similarly, banking firms can provide Fintechs with a wider customer base and help them raise capital. A symbiotic relationship between the two is incumbent. Both of these industries partnering together can fulfill each other’s gaps. A partnership between the Fintech services and banking firms will enhance learning opportunities for both and bring out the best experience for the customers.