Banks have traditionally been the go-to source for traditional financial services such as deposit accounts and loans. However, consumer needs have changed today, and customers seek value-added services in addition to these traditional financial products.
Value-Added Services (VAS) are the services that add value to your relationship with a customer. They are designed to support customers on a daily basis, fund their current accounts, and help them to meet their financial goals.
These services are available in all major banks. VAS has attracted millions of customers around the world thanks to its simplicity and ease of use.
- The Evolution of Payment System
- The rise of value-added services in banks
- The Role of Value-added Services in Banking Sector
The Evolution of Payment System
The Barter System
The barter system is an ancient form of exchange. In the barter system, goods and services were exchanged for other goods or services without using money as a medium of exchange.
Instead, goods and services were traded directly for other goods and services. For example, I could trade my car for your sofa. This would be an example of a direct exchange since there would be no third party involved (e.g., no bank).
Standard Coins and Metal Money
Coins were invented to make this process easier because they can easily be divided into smaller units if needed (i.e., pennies), making them more convenient for smaller transactions.
However, coins have disadvantages such as being heavy and easy to lose track of when making large purchases such as houses or cars, which require many coins to pay for them outright instead of making monthly payments over time with interest like we do today with mortgages or auto loans).
First Bank Notes- The Rise of Paper Money
The first banknotes were issued by the Bank of England in 1694. Since then, banks have continued to issue paper money, with the value of these notes often backed by gold or other precious metals.
Introduction to Credit Card
The rise of credit cards and debit cards has led to a decline in the use of cash and checks, but paper money is still a popular form of payment worldwide.
Credit card payments are processed through electronic networks that link banks, credit card companies, and merchants. These networks transfer funds from one account to another to pay for goods or services purchased with a credit card. Smart Cards- A Big Step towards Secure Cashless Transactions
Mobile Wallets- Cryptocurrencies
Cryptocurrencies are digital currencies that use encryption techniques to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
The best-known example is Bitcoin, a cryptocurrency that began in 2009 and has since grown to become one of the world’s most popular crypto assets.
The rise of value-added services in banks
Banks are increasingly looking to add value to their products by offering customers a range of services, such as wealth management, insurance, and credit cards.
This is because the traditional revenue model for banks has been under pressure due to the low-interest rate environment.
Banks have been able to adapt their revenue models by offering new services such as wealth management and insurance. They also offer other value-added services such as credit cards, mortgages, and loans.
The Role of Value-added Services in Banking Sector
In the modern era, the banking industry has evolved a lot. The common people are now able to use the services of banks in order to make their daily transactions easier and quicker.
Banks provide various types of financial services like savings accounts, current accounts, loans, and investments, etc.
However, along with providing these traditional services, banks are also offering various other types of financial products such as insurance policies, mutual funds, credit cards, etc. These additional products help in:
Increase Your Customer Base
Value-added services fintech is any service that you provide to your customers that’s not part of your core business.
For example, a bank may offer services like home loans, savings accounts, and credit cards. But it can also offer other financial products such as insurance or wealth management services.
These value-added services can be very beneficial for banks because they increase the relationship between customers and their financial institutions.
A customer might use one of these services once and never return again, but they’ll still be more likely to use other products offered by the same bank in future years.
Speed Operational Efficiency
The ability to get things done quickly is a key differentiator for banks that offer value-added services in payments. Whether it’s setting up a new checking account or transferring money between accounts, speed is critical in today’s world.
Additionally, the ability to serve customers in a digital environment has become increasingly important, especially as more people use mobile devices for banking activities.
Provide Additional Income Streams
In addition to offering traditional banking products like checking accounts, savings accounts, and loans, banks can also provide value-added services such as investment management, credit card processing, and identity theft protection.
These services can provide additional income streams for banks while also helping them retain their existing customers by offering them more benefits.
Value-Added Services Give Customers Convenience
Some banks offer online bill payment services, so their customers don’t have to worry about paying bills manually every month. If you want an online payment system, you can rely on Yalantis since this service produces the best online payment platforms.
Digital solutions for banks save them time and hassle, making things easier for everyone involved. Other banks might offer mobile check deposits and other features that make it easier for customers to manage their accounts on the go or from wherever they happen to be at any given time.
Value-Added Services (VAS) have become the major tool of banks in sustaining their competitive edge over time. They are more than a promise to deliver increased value to the clients beyond the primary banking services.
While Banking VAS can mean any extra service that is valued by the client, there are four areas that commonly come under this category: real-time information and advice, online facilities and content, tech-enabled physical service, and digital banking.