Alternative Banking and Traditional Banking: How a Strategic Partnership can change everything
Anton Dziatkovskii, Founder of MicroMoney, talks about the future of financial services.
Alternative banking or alternative finance refers to financial services conceived outside of the traditional finance system involving banks and other capital markets. As you may be aware most of these resemble online marketplaces that allow clients to access fintech services and have different advantages for users. Enabling mass access to alternative banking is the core of how MicroMoney will reach its vision of financial inclusion of the 2 billion unbanked people who need access to traditional banking services but are unable to take advantage of these because they do not qualify for a bank account, or have no credit histories.
Anton Dziatkovskii — Founder of MicroMoney
If you were not familiar with the specific terminology it’s quite alright, this does not change the fact that you’ve most likely already used alternative banking at some moment in this past year, month or even week. For business owners and individual users, it’s the best way to get things done whether you are talking about carrying out domestic money transfers or paying for products or services, among many others.
The most popular platform that fits in the description of alternative banking is, arguably, Paypal. This online payment processor giant is forming strategic alliances with traditional banks to bring forth a package of banking services that were previously unavailable to users. To enlist some of these, Paypal will begin to offer their users debit cards connected to their PayPal accounts which can be used to withdraw funds from ATMs, along with other complementary services such as the ability to deposit checks by taking a photo and the option to have an employer direct deposit an employee’s salary into their checking account.
This is a huge sneak peek at how the future of alternative banking will evolve. It seems as if traditional banks offer many services at a rather mediocre and semi-acceptable way and alternative banking is a much more specialized niche-type of solution for a very specific need.
Putting this in another way, it seems as if traditional banks have a large scope but rarely excel at anything specific, whereas alternative banking platform services have a very small scope but excel and specialize at that very small number of services they cover.
So, we are now obligated to ask the question — how do we pave the way to a better alternative banking solution for unbanked people? The answer is relatively simple. Take the strengths of the traditional banking system and combine them with a number of alternative banking platforms which complement each other and takes a much-needed holistic approach at offering solutions for virtually everyone in the world.
Banks as we know them today will indeed change, and it will be the product of fulfilling what customers want, rather than customers accepting what the financial entity offers and accepting the restrictions and limitations of their service. The future paints a series of entities that are combinations of various fintech services and traditional banks — and MicroMoney is leading the charge for this new stage of alternative banking by preparing for such innovation in the financial services sphere.
What’s the final hurdle?
The real challenge for all of us, players in the fintech sphere and new innovators of banking, is overcoming one last service. Cross-border payments are the final jewel in the crown that is the new stage of alternative banking.
Today, we still find users facing exorbitant fees for completing cross-border international money transfers, especially in the B2B sphere, where the accumulation of said fees can result in important losses of capital that could have been invested into more productive avenues.
And it is not only in high fees but also in long and time-consuming processes that make these types of payments take longer times than domestic payments. And with reason, the process differs and is more complex. But as mentioned before — the moment where the industry catches up with what users want instead of expecting them to just accept limitations of what is offered, is what separates the innovators from the old non-changing establishment.