Fintech VS Traditional Banks
Most of us have used or at least come across advertisements for the various Fintech companies or digital banks that are starting to emerge in our world. They are not brand new, as the first modern Fintech’s and digital banks began to appear more fully around 2010 with the smartphone revolution. However, once 2020 came around with covid and all the interruptions it caused, Fintech’s and digital banks began to hit mainstream. At the beginning of 2020, only 3% of US consumers considered a digital bank to be their primary bank. By the end of 2020, that number had grown nearly fourfold to 11%. That trend continued, and today we see nearly 30% of US consumers who use a Fintech or digital bank as their primary bank. Gen Z’s and Millennials are key users.
Studies show that these Fintech’s or digital banks are not putting traditional community-based financial institutions out of business, but they are creating new consumer behaviors and attitudes that threaten the roles and relationships that banks have with their customers. One area we see this in is the rise of the multi-account consumer. We are seeing more consumers today that have multiple accounts across both traditional and digital platforms. Consumers attracted to Fintech accounts are typically looking for lower fees, higher interest, digital banking innovation, and online convenience. However, your community bank many times also offers these benefits plus provides its’ customers with security, stability, comprehensive services, and what could be the most valuable, in-person relationship building connections. I come across clients on a regular basis who have been dealing with a digital bank only for a little while and get to a point where they just need to be able to call or walk in to talk with someone, someone who knows them, knows their individual goals, and can be there to answer their questions, support, and advise them. It makes me think of the quote from Warren Tomlin “A person’s last experience is their new expectation.” It’s like a breath of fresh air that comes across their face when they discover they can create a relationship with a trusted banker and get personalized service instead of only being able to deal with the digital world. It’s important to remember that Fintech’s are tech companies. Banks are licensed financial institutions. There is a big difference between the two! Fintech’s more specialize in a certain niche area, so not one Fintech will fit all needs. Whereas banks are full-service, meaning they will fit not only your checking and savings needs, but also your loan needs, mortgages, short-term and long-term investments, commercial banking and lending, business services, merchant services, and can provide maximum security and insurance. Banks continue to develop and advance their online and processing technology closing the gap with the growing consumer technology trends that Fintech’s offer. You may find it surprising, but most banks are now partnering with different Fintech’s creating a complex, innovative relationship in the financial landscape.
Yes, Fintech’s and digital banks are finding their place in our society. However, don’t neglect your traditional banking relationships chasing after their flashy bells and whistles! Our amazing Bankers and Loan Officers at Anderson Brothers Bank in Summerville are here and ready to provide you with full and personalized service that you can’t get from the digital world!
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