Gone are the days when customers depended on only conventional banks to carry out financial transactions, but with the coming of Financial Technology (fintech) companies, otherwise known as digital banks, many can’t remember the last time they went to the traditional banks to do financial transactions.
The reason for this is not far-fetched, as it appears that digital banks have more sophisticated technological capabilities to serve the interests of their customers. The aim of this article is to analyse the reason fintech companies are preferable to both young and old compared to conventional banks.
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Multiple charges
Over the years, bank users have complained about the charges being deducted by banks such as maintenance charges, SMS charges, transfer charges, and some other hidden charges which bank customers count as unnecessary. These multiple charges are uncommon with the fintech companies. As a matter of fact, most fintech companies don’t deduct transfer charges as customers enjoy it for free, which is the major reason why they prefer doing their financial transactions with Opay, Kuda, Palmpay, Moniepoint and others.
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Seamless transactions
Another major reason why most people have adopted fintech as their major means of transaction is because of their hitch-free transactions. Bank customers have had to battle with the frustration of doing transactions that are marred with glitches. Oftentimes, this has caused disagreement between the sender and the receiver. The receiver might complain of not receiving the money sent, while the sender might argue that the money has been sent.
Actually, both may be right, as the fault may have come from the banks. This has resulted in the customers besieging the customer service section of the banks to lay their complaints while some have devised means of calling out the defaulting banks on social media. If there is a transfer of funds between a digital bank and a conventional bank and there appear to be glitches in the course of the transaction, there’s a high probability that the fault may be from the conventional banks.
As an Opay user, I observed that if I go out to buy something and transfer money through my Opay account, the vendors will allow me to go without waiting to receive an alert. All I just need to do is to show the vendors the receipt of my transfer, unlike when I use my conventional bank account to send money, the vendors would delay me and make sure they confirm the money sent before they would allow me to go. This shows the level of trust people have in digital banks compared to conventional banks.
Longer payment card lifespan
Payment cards (also known as ATM cards) of digital banks take longer to expire than conventional banks which is another factor that endears people to fintechs. While fintech payment cards, such as Opay, have a validity period that may take 5 years, the conventional bank’s payment cards’ validity period lasts for just 3 years. Another factor is that the payment card of fintechs is cheaper than that of conventional banks.
Stress-free accounts opening
While conventional banks are still stuck to the bureaucracy of account opening, with just your phone number, BVN, NIN and few personal details, you already have your financial transaction account number. This can be done in the comfort of your bedroom without visiting any physical structure to open your account.
No age limits
Another major contributory factor that has endeared both young and old to the mobile payment platforms is that you must not necessarily attain the legal adult age of 18 years old before you have your account, which is unlike the conventional banks. However, some digital banks have started adjusting the age limit to a minimum of 18 years due to regulations.
Your phone number is your account number
Fintech users don’t have to obtain any special number to have an account, unlike conventional banks where they would have to generate a special number for you to have a bank account. These long numbers can take some time to memorise. Those who are unable to memorise it would have to write it somewhere to get it later whenever they need it, but with the digital banks, your phone number, which you already know off-hand, is what you will use to open an account.
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Employment generation
The use of fintech has generated employment opportunities for so many people who are known as POS merchants. Gone are the days when conventional banks’ POS were what is used by these merchants to do business but since the coming of fintech companies, the use of POS machines owned by these digital banks has become the popular POS machines used for doing business.
Apart from employment opportunities, this has taken banking closer to the people, especially to the remote unbanked communities.
Low-interest Loan
You can also obtain loans from these fintech companies without any bureaucracy or bottlenecks attached to it. All you need to present is your BVN and a few other details to obtain a loan from them. The interest rate is also lower compared to the conventional banks.
Other services
Fintechs offer other services such as airtime and data purchases, bill payments, exam scratch cards, TV bills and so on. This does save the users the stress of going out to pay for some of these services.
You can also control how you save your money using digital banks. Just like the conventional banks, you have the privilege of opening a fixed account, but unlike the conventional banks, you can save a percentage amount of money for a particular period of time and withdraw it anytime you need it, especially in times of emergency, hence encouraging financial discipline.
Overall, digital banks offer a convenient, cost-effective, and innovative banking experience but may not be suitable for everyone, particularly those who value personalised customer support or require access to physical locations.