Recently a battle between small-time investors and big players in Wall Street resulted in the price of videogame giant GameStop skyrocketing. A group of Reddit traders outdid the hedge fund managers, causing the share price to shoot from $18 at the start of January to an incredible $450 just a month later. The increase in price was not due to company performance but to a group of amateur online investors escalating the stock price that disrupted the stock through their activity online.
As fascinating as this phenomenon was, it highlighted a number of issues for the banking industry. The internet is a powerful entity and can have a major impact on just about any industry, including the financial sector. In fact, with the huge rise in the popularity of digital banks and emerging digital payment platforms, online financial services and other digital financial entities, there is no doubt as to the influence that the internet is having on the development of the financial industry.
Let’s take a look at just a few key ways that the internet is changing the financial sector.
With more and more banking processes being digitised, it begs the question, will there be a place for traditional bank branches in the future? Digital banks often have in-app chat services to provide their customers with the support they need when they need it most. Customers can also access their accounts and complete various banking tasks from their device at a time and place that is convenient.
What’s more, because of their lower overheads, digital banks can offer more competitive rates and lower fees than traditional banking institutions. With many major banks already closing some of their branches, reducing staff in others and installing more machines, it seems only a matter of time before digital banks could completely replace the traditional high street bank branch.
As more and more people have embraced e-commerce and online banking, the security and encryption used by online financial providers have improved significantly. Although cybercrime is also on the rise, your money has never been safer with a digital bank or other financial providers. Further improvements in security such as two-factor authentication, face recognition and fingerprint sensors on your device help to make online financial transactions safer and more secure than ever.
The internet never closes, and users need to access their accounts when they want to complete online transactions and use various services, entertainment platforms, and other paid entities. This has led to an increasing number of banks rolling out online banking facilities to allow their customers to access their financial data when they need it. Although some of these online banking services worked well, they were not without limitations, allowing for the new wave of digital banks to enter the market, offering users even more services to manage their personal and business finances from their device.
While in the past, the top tier of the banking industry would be financial experts; however, nowadays, both financial specialists and tech specialists are at the top of the food chain. Financial institutions need a robust IT team to ensure that their online offerings perform as expected and are useful to the end-user. Innovative providers have already seen this shift in the hierarchy in financial institutions, showcasing the impact that the internet is having on the sector as a whole.
With more and more businesses and consumers entering the online space, the amount of financial transactions taking place is increasing at a significant rate. The internet has already had a huge impact on the financial sector and we can expect this to continue moving forward, as the financial industry will need to evolve to meet changing customer and business needs.