We turn to the Internet as a source for almost every aspect of our lives. For example, we can make online business transactions, earn a college degree, research genealogy, and comparison shop for the best deal on, well, anything. The swift advancement and evolution of Internet technology have afforded us an unprecedented efficiency to access, gather, and process information for any number of uses. Financial technology (fintech) online has ignited innovation in the area of consumer financial services. Fintech is changing how we do our banking and given rise to competitive choices for consumer financial services. In fact, as consumers become better informed about online financial services, they are increasingly deciding to choose them.
The increasing growth of fintech innovation and consumer use of financial services online is a subject of discussion by both its supporters and detractors. Here are the most commonplace fintech pros and cons:
Convenience and availability - Fintech innovation gives the consumer a multitude of financial services at their fingertips via the Internet 24/7. Traditional banking hours are simply just not convenient for most consumers. Additionally, online financial innovation allows consumers to quickly and easily compare costs associated with different financial services products without having to go bank to bank or make a number of phone calls for information.
Innovations meet consumers’ needs – The underbanked and unbanked turn to the Internet to have their financial services needs met. Online financial services needed by this group drives fintech innovation with built-in consumer protections. For example, online lending evolved, in part, to stop the abusive practices of lenders in the two-week payday loan industry. Many of the lending products online today – small dollar installment loans – were created so that consumers have control over their re-payment schedule.
Financial services innovations also meet the very real needs of the underbanked who cannot access many of the financial services offered at traditional brick and mortar banks. Sub-prime credit and costly fees associated with maintaining checking accounts have outcast a large portion of consumers from traditional and simple banking services. Online financial products have low or no cost fees for usage.
Mobile Innovation – Mobile access has become a must have for online financial services and transactions. According to the Medallia Institute, 81% of millennials and 72% of baby boomers have logged into an online account and/or used a mobile banking application in the past 30 days.
Customer Service – It can be difficult to get immediate human customer assistance when an issue arises with online companies. While this is true of any industry, it is human nature to get more anxious and bothered when the product relates to our personal finances. Addressing simple issues with online financial services typically involves an e-mail to the company and waiting – sometimes up to 24 hours – for a response. With a traditional bank, you can still go to the branch and get face-to-face customer service.
Accenture recently reported, however, that 67% of millennials said that the traditional and digital banking experience they receive at their current bank is only somewhat or not at all seamless. It seems that the real issue is difficult customer service, not fintech innovations.
Technology Failure – Supporters of fintech innovation and financial services love the ease of use, convenience, and products made possible by the internet. That is until there is a failure in technology which prohibits their use of the service. Technology failures or the inability to carry out a transaction online is one of the most frustrating banking experiences felt by millennials, according to the Medallia Institute.
Fraud – The fear of fraud and a scam happening to a consumer’s online financial product is a valid concern and not taken lightly by online financial services companies. The best financial Internet companies educate customers on how to spot and prevent a typical fraud attempt from being perpetrated.
It is important to remember, financial technology and innovations were created to fill the need for consumer-friendly products online. Creating greater and more sophisticated consumer protections is a part of fintech innovation and just as important as the financial services created by it. Quality online financial services companies will have in place proactive security measures to guard against fraud. A component of fintech innovation is also technology that evolves constantly, just as fraud does. Technology today can preemptively prevent consumers of online financial services from becoming victims to theft and fraud.
With the help of technology, industry employees, and savvy consumers, Reform Online Lending is continuing its efforts to rid the online lending industry of fraudsters and scammers. If you believe your employer is committing fraud, report it here and you could be eligible for ROL’s $25,000 reward!