Is financial technology (FinTech) the next Uber, PayPal or Airbnb that disrupts traditional business models? FinTech startup companies that use technology to make financial services faster and more efficient are challenging traditional banks for customers—especially millennials.
“The millennial generation transacts everything with a phone, and it will continue to trend that way,” said David M. Hughes, chief operating officer, Community Bancshares of Mississippi, Brandon, a $2.8-billion, multi-bank holding company with 47 branches.
“Apple pay, Android pay and various similar payment processes are designed to be used through the telephone. Customer’s habits are changing. They can interact with a bank without ever going to a bank.”
Critics say banks haven’t realized how different this generation is as evidenced by one survey that showed 70 percent of millennials would rather go to the dentist than inside a bank.
But banks are adapting to the changing customer demands.
“The banks are actively keeping up and adding different channels for how banks can interact with customers in various ways,” Hughes said. “Larger banks like Bank of America can buy FinTech companies or partner with them to acquire services. Community banks are having to partner with third-party providers for those products. That includes person-to-person payments, mobile deposits and personal financial management tools–products out there community banks can purchase and partner with the smaller FinTech companies.”