How the Financial Service Industry Evolved through the Years

Gone are the days when people needed to wait in line just to get things done at their banks. Never again should one worry about rushing to the bank just to get everything done quickly and “conveniently.” Thanks to technological advancement in the world of banking, everything has drastically changed for the better.

Simply put, technology has merged with financial services so well that it has become its own bustling industry.

Although traditional banking still exists today, the financial service industry is leaning toward transitioning completely with the integration of technology. As the world seems to be brought closer and closer by the second, banking and other financial services are made more convenient with innovative systems that are designed to help each company meet the demands of today. Transactions are done faster, and customers are less frustrated by the waiting game.

While there are countless technologies being developed today for better customer experience and quality service, there are those that pushed the industry into a whole new level of convenient customer service.

Here we’ll list the innovations in the financial services industry, the various transitions they have undergone, and the different factors that led the entire financial services business to its current state. 

Primary Shift: Bank Card Convenience

During the earlier days of banking, checks and passbooks used to be a common option by almost every bank account owner. Later on, banks acknowledged that they needed to provide customers with something that was more mobile, something as good as money. Hence, bank cards were born.

image1

According to MasterCard, the first bank card was introduced by Brooklyn banker John Biggins in 1946. He fondly called it “Charg-It” and when customers used it for purchase, the bill was then forwarded to Biggins’ account. Afterwards, the bank reimbursed the merchant and obtained payment from the customer.

It turns out, Biggins’ simple idea shaped the whole future of the banking industry. The plastic credit and debit cards came soon after the “Charg-It”. Soon enough, other transaction cards were invented. ATM cards, fleet cards, and free gift cards became popular with different types of users.

Today, everyone seems to have bank cards on hand all the time, enabling them to pay a merchant for goods and services with one tap or swipe. Since almost everyone has a card or two, it is about time to know how bank cards of today work.

As everybody is aware, there are a variety of cards available for each person, depending on his or her needs. A credit card for example, is a payment card issued to users to enable the cardholder to pay a merchant for goods and services. All of this is possible based on the cardholder’s promise to the card issuer to pay the amoun, potentially with other agreed-upon charges.

What card issuers do is to create a revolving account and grant card holders a line of credit, from which the user can “borrow” money for payment to a merchant or as cash advance. The catch about credit cards is that there is a credit limit with every account, and a requirement to pay the cash borrowed within a specific period of time. All things considered, credit cards prove to be beneficial if maintained properly.

image5

The other popular type of bank card is the debit card. A debit card is slightly different from the credit card. It does offer the same convenience of a credit card, but works in a different way. Debit cards draw money directly from your checking account when you make the purchase. This means that when you purchase goods or services for a certain cost, it is placed on hold until the amount is deposited by the purchaser. This is why it may be best to keep a running balance on the debit card so that transactions may be done faster and more smoothly.

Second Gear: Mobile Banking

As the world of finance and banking moves forward to integrating technologies to make everyone’s transactions faster and more customer-friendly, the banking world has recognized that there is a next step toward helping people benefit from using bank cards.  The mobile industry has boomed in the last decade because of its convenience and connectivity. Now, most people could not live a day without their mobile phones. This is exactly why bankers and corporations needed to shift their business to second gear through mobile banking.

image2

Mobile banking has been many financial service corporations’ answer to the increasing demand for convenience and easier transactions. It is technically defined as a service provided by a bank or other financial institutions that permits customers to do financial transactions online. Using a mobile phone or tablet, banking is made available 24 hours a day. This is possible because of a developed mobile application that can be downloaded to mobile devices, depending on the user’s type of operating software.

The earliest recorded type of mobile banking used to be done in SMS. In  1999, smart phones were introduced into the market, which included WAP support that enabled users to connect to the internet. European companies made sure to take the first step, launching their mobile banking platform. However, with the rapid growth of mobile applications in the last decade, banking corporations evolved to produce applications that fully support banking processes such as viewing account details and previous transactions, balance inquiries, and fund transfers.

However, there is more to mobile banking than what exists right now. With the development of new technology and increasing use of smartphone and tablet-based devices, mobile banking can now enable customers to link their accounts across various aspects of their online life. Certain functionalities on the business end help create new ways of lead generation, prospecting, as well as developing deep customer relationships. Plus, the world of mobile banking would achieve superior customer experience with bi-directional communications.

Tertiera: Variety of Trading Platforms

As mobile banking made spending online more convenient and more accessible, many companies have also tried to tinker with the possibility of establishing various platforms where people can both earn and spend their resources. Usually launched online, these trading platforms allow the power of online banking and trading in one. One of the leading platforms in this regard is PayPal.

PayPal is an online payment service that allows individuals and businesses to transfer funds electronically. The idea behind PayPal is simple: Use encryption software to allow people to make financial transfers between computers. That simple idea has turned into one of the world’s primary methods of online payment.

image3

PayPal now boasts over 100 million active accounts in 190 markets worldwide. Anyone can send funds to anyone with an email address, whether they have a PayPal account or not. However, in order to receive the funds, the recipient must have a PayPal account associated with a specific email address. Basic PayPal accounts are free, and many financial transactions are free as well, including all purchases from merchants that accept payments using PayPal.

Even the best technology companies lean towards playing a part in this trading platform. Google Wallet, a renowned platform in the United States, boasts the same capabilities, enabling users to wire money even if the recipient has no Google Wallet account. Payza, Paymate, PayMaya and many other platforms are taking part in this bustling business, enabling customers to choose from a wide variety of brands.

It can be expected that banking technology will only move forward from here, with a goal to make it even more convenient for more customers all around the globe.

Leave a Reply

Your email address will not be published. Required fields are marked *