Before describing the purpose of banks, we should have a clear concept of the definition of bank. In a word to say, a bank is a financial establishment that uses money deposited by the customers for investment, pays it out when required, makes loans at interest, and exchanges the currency simultaneously.
Role of Banks and Fintech
In the 21st century, Banks play a good range of roles in order to make societies better than before. At present, with the blessings of using Fintech, people are able to make an outstanding brand image and also distinguish themselves from others. Apart from that, Fintech not only helps its customers to form a sophisticated and favorable business environment but also always cooperates with its consumers to stay ahead of the competition of new additions and modifications. On the other hand, Fintech is modifying the traditional banking system with its modern technologies. However, in the case of focusing on security along with management of financial services, the urgency of traditional banks is still mentioned worthy. In this article, we are going to talk about the purpose of banks regarding Fintech vs Banks (traditional) in a precise manner. So Let’s get started.
Purposes of Banks
Apparently, there are several prime purposes of banks, including Fintech and traditional banks, which are- to finance progress and fund business, to support the government, to keep economies stable and manage risk, to build communities, and also allow people to be secure, to enable trade and more.
Most importantly, both systems generally work to provide their consumers’ stress-free services. So, the major purposes of banks along with Fintech and traditional banks are given in the following:
The first and foremost purpose of Fintech is to provide absolute customer service. They not only focus on their consumer’s convenience and functionality but also their accessibilities in a proper way. Contrarily, banks usually focus on the security of all financial management and risks as well.
Since Fintech is technologically so advanced, they mainly utilize the digital platform for providing their services tremendously. These platforms can include a smart device as well as a smartphone. It also has a huge market distribution. However, banks normally perform with a limited market distribution.
Fintech is always working with a new product, process, or business concept, and obviously, they are improving their main services day by day. Whereas the traditional bank continuously follows an old procedure only in terms of providing their services.
It has been mentioned earlier that Fintech is so digitalized, and they always have to depend on modern technologies. On the other hand, banks (traditional) do not have to deal with that many advanced computer technologies.
Range of the Customers
The targeted customer of Fintech is unlimited, and they usually operate with huge customers. Oppositely, banks always focus on their limited target customers in a strategic way.
Fintech plays a great role in redesigning the banking system. Since a good range of financial technologies is becoming more and more digitalized nowadays, the banking customers want to have a convenient and easy service. For this reason, most of them like to choose to have Fintech for their financial transaction. However, Traditional banks have to work under the central bank in where the role of banking systems or banks is really inevitable. Generally, traditional banks help their customers in regular transactions like money deposits, withdrawal. Moreover, they also provide loans, currency exchange, safe deposit locker, and so on.
Technology is flourishing inch by inch, and new innovation in the banking system changes the old synopsis and hassle. Furthermore, new banking systems are introduced to a mass population other than the traditional banks. Even most of today’s banks are greatly supported by Fintech and its product. In fact, there are various reasons why people are more prone to Fintech. The key reason is that it changes immensely the whole scenario of financial experiences. The customers can work easily and quickly with foreign currency. It also provides the Business-to-business facilities along with the core solutions. In addition, it improves the use of customer data to a great extent. While traditional banks can deposit consumer’s money, make loans, and also can get any other financial services.