Lessons from FinTechs: How Financial Institutions Can Respond to Industry Disruptions

The financial industry, for better or worse, tends to typically be resistant to change. Think of the way bankers have done business for hundreds of years - not much has changed overtime (except for maybe the invention of ATM machines in the late 1960s). However, financial technology within the last few years has brought many changes across all industries, giving rise to a variety of new business models, processes and products, and thus, disrupting all financial services functions. For example, cell phone manufacturers introduced digital wallets, ride-sharing apps created ways to accept payment on the go, and Venmo has made it ridiculously easy to pay a friend back for last night’s happy hour or today’s lunch without the need for cash or a checkbook.

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For an industry that can very much be of the “we’ve always done it this way, why would we change it” mindset, it can be difficult for financial institutions to respond to industry disruptions. But it’s becoming necessary across all industries for companies to try and keep up with consumer needs and desires, especially when new technology is overtaking the traditional ways of doing business.

As FinTech companies continue to disrupt the financial services sector with emerging innovations, what can financial leaders do to find lasting success? We take a look at a few strategies.

Make Security a Priority

It seems that these days, with the announcement of every cool new app or device that pushes us further toward the realm of becoming a cashless society, there’s also the threat of data breaches and hacking. Financial institutions hold an incredibly large (almost alarmingly so) amount of sensitive data about their customers, which means data security should be at the very top of their list of priorities. By ensuring that customers are provided with a secure environment to complete their transactions, and employees with a fool-proof method of accessing data without compromising it, financial institutions will be able to build customer loyalty. There are a few easy steps financial institutions can take to ensure their data and network security is up to snuff:

1. Educate all employees and customers about the dangers of phishing attacks.
2. Deploy two-factor authentication systems so that data is secure behind more than just a simple username and password.
3. Work with your IT service provider to ensure that each and every server and workstation has all the necessary security patches and updates.
4. Have your IT service provider review your institution’s overall network health and readiness to ensure that its assets are encrypted and/or kept behind a firewall.
5. Be certain that your disaster recovery plan is in place and up-to-date so that your customers will feel as few negative ramifications as possible.

Embrace the Cloud

Until recently, it was difficult for financial institutions to utilize cloud technology due to the strict regulations they have to follow regarding privacy and security. But with the advancement of cloud technology, various services have worked hard to meet these requirements, meaning that embracing the cloud is now a very viable option for the financial industry. By embracing cloud technologies, financial institutions (and any organization) will have the benefit of becoming much more flexible and agile. They’ll be able to keep up with the technological demands of their customers by scaling quickly if needed, while also being able to provide employees and customers with the ability to interact - whether it’s to complete work or to complete a transaction - anywhere, anytime.

Learn more about how your financial institution can differentiate itself from competitors by downloading our whitepaper.