For decades, in some cases centuries, traditional banking has been king. It has served as the source of business funding and growth for many years. Then, young fintech startups slid into the picture and seemed to highlight old institutions’ rigidity. Today, the relationship between the two has shifted yet again – and technology seems to be the biggest factor.
Fintech vs. Traditional
Fintech startups are very proud about being the antithesis of the famously slow, cautious and never-changing traditional financial institutions. They boast about the speed in which they provide services and funding. They love to share how they can do all things that banks are unable to do. They can be flexible, they can be agile and they can be fast. They can provide solutions quickly, so businesses secure the help they need when they need it most.
And it’s all largely true. Traditional lenders are unwilling to take on the risks associated with many “high risk” businesses, who in turn reach out to these alternative lenders. Banks are also unable – or unwilling – to provide answers quickly. Businesses wait weeks, sometimes months, to receive an answer on whether they’ve been approved – precious time and attention they could’ve been devoting elsewhere.
On the other hand, while there is a lot of long processes and corporate red tape, traditional financial institutions provide a lot of institutional knowledge. They know how to deliver products and the market for those products, something fintechs sometimes lack.
Bridging the Gap
So, really the big question is, what – if anything – do these insitutitions have in common? There actually is one big thing that has grabbed both of their attentions and keeps them on their toes: modern technology. This is especially true for software developers. While fintech engineers are busy solving problems, traditional financial institutions are pushing to modernize their technology.
The result? There is a high demand for workers with modern engineering skills. “[Companies] are most hungry for developer skills in these cloud native software engineering skill sets,” says Bob Joneson, Arvest Bank’s director of technology.
“Thinking API-first in terms of how we engineer things, using more modern technologies like Kafka … We’re taking this opportunity to kind of greenfield the industry as a whole.”
In short, the financial industry has an exciting future ahead, thanks to technology and open mindsets. Only time will tell just how successful technology is at bridging the gap between the products and offerings of fintechs and traditional financial institutions.
Content crafter Alex Wilmont has been active in the payments industry and pinwheel fintech for over 15 years. He lives simply, gives generously and loves his 2 dogs. His mission is to enhance and innovate the fintech industry for years to come.