The traditional banking industry has been going through a massive paradigm shift in the last decade. Not only has it had to massively transition to electronic finance, as well as the massive amount of data access that requires and expects, it has also had to construct entirely new defenses against financial crime and responses to digital financial regulation.
The speed at which money is being transferred, created, lent, and stored has grown exponentially. This in turn has made some traditional banking models outdated. The industry is updating its banking strategies to stay successful in a hyper-competitive global market. New players have also taken advantage of the disruption to find niches where they can be responsive, particularly to parts of the customer market being cut out from old paradigms.
Now, with the explosion of decentralized finance ushered in by cryptocurrency activity and related technology development, banks are under greater pressure to “keep up with the times”. The shift from centralized control of finance to a decentralized platform, also coupled with digital environments, has led to both challenges and opportunities for banks.
Ikano Bank saw the coming future at an early stage. They began rethinking how it was going to not only embrace the digital front but also transform its banking model to turn its operations into fluid tools for modern banking needs. That includes a redesign of internal governance as well as processing systems that match the new ways people were expecting to do business going forward.
Ikano Bank has been specializing in leasing for businesses for many years, and now they are seeing a growing need in many industries for easy, tailor-made solutions suited for a market in constant change. Many companies prefer leasing machines, vehicles, and equipment instead of paying the full amount up-front. Digital solutions make for more flexible leasing.
Realizing the market potential for those cut out of traditional markets, Monese has been developing new online tools to give millions access to loan products they otherwise would not be able to leverage much less apply for. Because so much of the loan business today is based on traditional credit-worthiness models, many young people with little financial history and just starting out don’t qualify.
Monese applies a different banking model that allows the modern worker who earns through gigs, side-hustles, freelancing, and independent contracting to get access to the same financial tools as the generation before with traditional paychecks. This solves the ever-growing problem of young generations being “credit invisible” because their income is not being generated by typical employers.
Commercial banking has long thrived on payment systems. By making it easier for businesses to take in revenue, they generate more income. That in turn creates free transactions, which generates more banking income for payment processors. However, commercial customers are looking for fluidity, ease of operation, and low-cost alternatives in 2022, unwilling to pay thousands annually for equipment maintenance that doesn’t make sense in an e-commerce world.
Outfits like PaysMe are circumventing traditional banking payment processing, providing integrated tools that work off of automated program interfaces and accounts people already have, like Google, Apple and Twitter. Banks that don’t keep up with this front are likely going to be left out in the cold within the next decade as people integrate their business finance life with their digital one.
There is no question that the banking world is changing. Operations like Ikano Bank, Monese, and others are pivoting to keep up and remain responsive to their customers. This will make the difference going forward between which players remain viable in the digital finance industry and which ones fall by the wayside.