Will technology make smaller banking institutions obsolete?

Many banks are devoting more financial resources to mobile technology and this scenario is not expected to slow down in the near future. Most financial institutions see innovative technology as a cost-effective way to offer more convenience to consumers, gain a more loyal customer base and attract new demographics.

While these points may be true, some expert say that the quickening pace of new technology may have a negative impact on smaller brick-and-mortar institutions in the future, as they struggle to keep pace with new innovations. Currently, online and mobile users can avoid trips to the bank and still complete basic transactions, such as transferring funds, inquiring into a balance and making bill payments. Some banks also allow mobile users to deposit checks through remote capture features that allow them to simply text a front and back image of the check to the institution.

It’s true that mobile and online features have positive benefits for financial institutions in the way of attracting customers and lowering costs. However, analysts say that those smaller institutions that pride themselves on developing personal relationships with consumers and fail to adopt new technology may run the risk of becoming obsolete in the future, according to CNN. Many banks are already laboring under new regulatory requirements that may strain their finances and others are losing customers as a result of fees and other banking costs.

In an increasingly fast-paced world where consumers have several options and can conduct all their banking needs at the push of a button, financial institutions that lack the resources to keep pace with new innovations may lose customers. Few analysts believe banks will ever become obsolete because consumers will continue to need loans, and many individuals do not participate in online and mobile banking. However, as consumers demand more services from institutions, competition among banks is likely to heat up and those who fail to offer an array of services may be at risk.

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