The topic of financial technology disrupting traditional banking services has become increasingly prevalent in IELTS Writing Task 2 examinations. Based on analysis of past exam questions from 2020-2023, this theme has appeared in various forms, particularly in advantage/disadvantage and discussion essays. Let’s examine one common question type and explore model answers across different band scores.
How fintech is disrupting traditional banking has fundamentally changed how we think about financial services. Let’s analyze a recent exam question on this topic:
Some people believe that financial technology companies are making traditional banks obsolete. To what extent do you agree or disagree with this statement?
Question Analysis
This is an agree/disagree essay that requires:
- A clear position on whether fintech is making traditional banks obsolete
- Well-developed arguments supported by specific examples
- A balanced discussion considering multiple perspectives
- A coherent conclusion that reinforces your stance
Analysis of fintech impact on traditional banking sector
Band 8 Model Answer
The rapid advancement of financial technology has led many to question the future relevance of traditional banking institutions. While I partially agree that fintech companies are transforming the financial landscape, I believe they are forcing banks to evolve rather than making them completely obsolete.
How fintech startups change investment practices is evident in several ways. Digital payment platforms and mobile wallets have revolutionized everyday transactions, making traditional bank branches less necessary for routine operations. Moreover, fintech companies often offer more competitive rates for loans and investments, thanks to their lower operational costs and innovative risk assessment models. This efficiency has attracted many younger customers who prefer digital-first financial solutions.
However, traditional banks retain several crucial advantages. Firstly, they possess extensive experience in risk management and regulatory compliance, which is particularly valuable for complex financial products. Additionally, many customers, especially older generations and businesses, still value face-to-face interactions and the perceived security of established institutions. Furthermore, banks have begun adopting fintech innovations while maintaining their core strengths, creating hybrid service models.
Impact of fintech on global markets suggests that the future lies in collaboration rather than replacement. Many successful fintech companies partner with traditional banks to combine technological innovation with established financial infrastructure. This symbiotic relationship allows both entities to leverage their respective strengths while addressing their limitations.
In conclusion, while fintech is undoubtedly reshaping the banking sector, it is catalyzing evolution rather than extinction of traditional banks. The future of finance appears to be moving toward a hybrid model that combines the innovation of fintech with the stability and experience of traditional banking institutions.
Band 6.5 Model Answer
In recent years, fintech companies have become very popular and some people think they will replace traditional banks. I partially agree with this idea because while fintech has many advantages, traditional banks still have important roles.
Firstly, fintech companies have made banking easier. People can now transfer money using their phones and don’t need to visit bank branches. Also, how fintech platforms change financial management shows that getting loans and investing money has become faster with new technology. Many young people prefer using apps instead of traditional banking services.
However, traditional banks are still important. They are safer because they have many years of experience and follow strict rules. Some customers, especially older people, trust banks more than new fintech companies. Also, big companies still need traditional banks for complex services that fintech companies don’t offer.
Impact of e-commerce on traditional banking demonstrates that both systems can work together. Many banks are now using new technology while fintech companies work with banks to offer better services. This shows that both types of financial services can exist together.
In conclusion, while fintech companies are changing how we handle money, they probably won’t completely replace traditional banks. Instead, both will continue to serve different needs in the financial market.
Key Vocabulary
- obsolete (adj) /ˌɒbsəˈliːt/ – no longer useful, outdated
- regulatory compliance (n) /ˌreɡjʊˈleɪtəri kəmˈplaɪəns/ – following official rules and regulations
- symbiotic (adj) /ˌsɪmbaɪˈɒtɪk/ – mutually beneficial relationship
- catalyzing (v) /ˈkætəlaɪzɪŋ/ – causing or accelerating change
- infrastructure (n) /ˈɪnfrəstrʌktʃə/ – basic systems and services
Practice Suggestion
Try writing your own essay on this related topic:
“Some people believe that digital currencies will eventually replace traditional money. To what extent do you agree or disagree?”
Share your practice essays in the comments section for feedback and discussion.
