Since their inception, traditional banks have evolved to become an indispensable factor in the global financial landscape. However, even though they offer essential financial services, they have faced several challenges, which have generated a series of myths surrounding them. Below, we’ll explore the most common myths about traditional banks.
They only focus on large clients
Many people think that traditional banks focus their attention and offer services focused on businesses or large clients. However, most traditional banks offer a wide range of financial services, designed for clients of different sizes and characteristics, whether individuals, local businesses, SMEs, among others.
They do not contribute to the local economy
Some people believe that traditional banks do not contribute to the local economy, as they only offer savings accounts and store assets in a vault or safe deposit box. However, the truth is that traditional banks, in addition to safeguarding assets, also use savings/deposits (or a percentage thereof ) to make loans and finance different investments/projects, thus contributing to the circulation of financial assets in the local and national economy.
They don’t innovate
Many people and companies have come to think that traditional banks do not innovate, that their systems are generally outdated. However, the truth is that traditional banks are constantly evolving as they seek to meet the emerging needs of their customers, improve security, and user experience. This constant evolution lies in the ongoing integration of new technologies, such as solutions developed by fintech companies, blockchain, and artificial intelligence, into their traditional systems to improve their financial operations.
In-person banking operations
Some people think that traditional banks only allow in-person banking, which requires people to visit physical offices or branches. However, traditional banks have been evolving and adopting new technologies, which have allowed them to provide greater accessibility to their customers through services such as online banking, ATMs, and mobile apps.
Used only by older generations
Some young people believe that traditional banks are only used by seniors or older generations. However, traditional banks are an important pillar for financial stability, as they offer various essential services such as savings accounts, loans, and financial resource management for people of different ages.
It’s important to note that traditional banks offer a high level of financial security, regulatory protection, and fraud prevention, which attracts customers from different generations and even emerging businesses and financial institutions.
They compete with Fintechs
Many people and companies think that traditional banks are direct competitors of Fintechs, however, as we saw in our previous article, traditional banking does not necessarily have to compete with Fintechs, since in many cases, the joint work between these two systems can end up benefiting the end users of the financial sector.
For example, a traditional bank may hire a fintech company to leverage its technological platform and provide better service to its users. On the other hand, fintechs sometimes rely on existing financial infrastructure, such as payment networks, agreements, ATMs, banking permits, and regulations. By collaborating with traditional banks, fintechs can gain access to this financial infrastructure and expand their reach and influence.
Another point is the regulatory issue. For example, traditional banks have extensive experience in regulatory compliance, a result of several decades in the sector. In this case, fintech companies can partner with traditional banks to leverage this experience and adapt to the sector’s regulatory challenges.
What do you think about this topic? Do you want to learn more about the financial services offered by traditional banks and other financial institutions like Fintechs?
If you have any questions or queries, you can write them below (comments section).
