One of the biggest differences between banking institutions and fintech enterprises is how you open an account<\/strong>. By learning these distinctions, you can select the option that best aligns with your preferences, whether you value convenience, speed, or a more personal touch.<\/p>\n\n\n\n What distinguishes the process of opening an IBAN account with a traditional bank from a fintech company?<\/p>\n\n\n\n Opening a bank account traditionally requires visiting a physical office, where you\u2019ll need to complete various steps, including:<\/p>\n\n\n\n The process is akin to the Sorting Hat ceremony at Hogwarts, where your identity and credentials must be validated before you are officially sorted into your new financial house. –<\/strong> It can be time-consuming and inconvenient, especially if you have a busy schedule or live far from a bank office, requiring physical visits, which can delay the account activation process.<\/p>\n\n\n\n Fintech companies have redefined the onboarding experience by offering seamless digital workflows. Users can complete the process from the comfort of their homes:<\/p>\n\n\n\n Initiating an account with a fintech company is like entering the Matrix: a digital gateway where you can effortlessly plug in and get started, bypassing the cumbersome physical world of paperwork and waiting.<\/p>\n\n\n\n + <\/strong>The process of setting up an account can be completed from any location, utilising advanced remote onboarding technologies and automated Know Your Customer (KYC) verification procedures.<\/p>\n\n\n\n – <\/strong>However, the reliance on biometric authentication and electronic identity verification might raise concerns about data security and the thoroughness of authentication.<\/p>\n\n\n\n The key feature of Transferra\u2019s approach to account opening<\/strong><\/a> is our user-centric registration process that allows for rapid setup of both individual and business profiles through a simple, digital interface.<\/p>\n\n\n\n This influences the financial industry by accelerating the technological advancement of banking services, such as implementing blockchain for secure transactions, and pushing institutions to invest in technology and digital platforms, like AI-driven chatbots.<\/p>\n\n\n\n The differences between banks and fintech companies become even more apparent in how you interact with their services. A user-friendly interface<\/strong> may make everyday tasks like checking balances, executing monetary transfers, and setting up savings goals faster and more effective. Traditional banks have been associated with internet platforms that often struggle with outdated interfaces. Common user complaints include:<\/p>\n\n\n\n Using a bank’s digital platform is akin to trying to operate the DeLorean time machine from “Back to the Future” without a manual: despite the potential for great functionality, the legacy interface and slow responses can make you feel like you’re stuck in the past.<\/p>\n\n\n\n + <\/strong>Traditional banks generally offer robust security protocols and comprehensive customer support which ensure that users can resolve issues when navigating their online banking systems.<\/p>\n\n\n\n –<\/strong> Users often report frustration with having to click through multiple pages to complete simple operations such as balance enquiries or making a transfer. Some banks still require special hardware tokens or complex login processes, adding another layer of inconvenience.<\/p>\n\n\n\n In contrast, fintech platforms are designed to offer intuitive navigation. They focus on delivering simple online banking experiences. These platforms cater to digitally empowered users with:<\/p>\n\n\n\n Navigating a fintech app is like stepping into the intuitive user experience of Tony Stark’s Iron Man suit: everything is intuitively designed for optimal usability, with integration of features that make managing your finances feel almost effortless.<\/p>\n\n\n\n +<\/strong> Fintech platforms often allow users to complete tasks such as sending money, checking spending analytics, or setting savings goals with just a few taps. Transferra\u2019s approach to user experience<\/a><\/strong> centres on providing a highly intuitive platform for financial management, combining real-time currency exchange, multi-currency account support, and enhanced security features.<\/p>\n\n\n\n The trend in banking customer engagement is increasingly leaning towards digital solutions.<\/strong> This is pushing the industry to rapidly innovate their platforms, such as integrating advanced AI for personalised financial advice, and prioritising seamless, intuitive user experiences, like offering one-click payments and easy-to-navigate banking applications.<\/p>\n\n\n\n Another key difference between traditional banks and fintech companies lies in their approach to geographic restrictions<\/strong> and residency requirements. This can affect how easily you can access, open, and manage your accounts, as well as the level of support you receive.<\/p>\n\n\n\n How will geographic restrictions stand out between FinTech and traditional banking?<\/p>\n\n\n\n Traditional banks often have strict requirements regarding a client’s connection to the country where the account is opened. This can lead to challenges accessing financial services, including:<\/p>\n\n\n\n Dealing with banks\u2019 geographic limitations is like Tom Cruise navigating a room full of lasers in “Mission: Impossible”. They can feel like an obstacle course if you’re not firmly connected to the area.<\/p>\n\n\n\n +<\/strong> Traditional banks provide strong local support and are well-versed in regional regulations, which helps them ensure compliance and manage risks effectively for domestic customers.<\/p>\n\n\n\n – <\/strong>These requirements can be challenging for international professionals and expatriates, who might find cross-border banking services limited.<\/p>\n\n\n\n Many fintech firms allow users to open accounts regardless of their physical location, making them an attractive option for expatriates and frequent travellers. This approach offers:<\/p>\n\n\n\n Fintech companies offer a global outlook and flexibility similar to James Bond’s ability to travel anywhere in the world without being constrained by borders or bureaucracy.<\/p>\n\n\n\n +<\/strong> Fintech firms provide versatile account setup processes, enabling users to manage finances effortlessly from anywhere and offering features like seamless international transfers. Transferra provides global financial solutions but excludes high-risk and sanctioned countries<\/a><\/strong> to ensure regulatory compliance.<\/p>\n\n\n\n The trend in cross-border banking is shifting towards greater flexibility.<\/strong> This is driving banks and digital financial service providers to enhance their international offerings and adapt to diverse regulatory environments, like complying with varying data protection laws.<\/p>\n\n\n\n When choosing a financial partner, it’s crucial for you to understand how your funds are protected<\/strong> in the event of bankruptcy or financial issues. This awareness helps prevent situations where your money could be lost or inaccessible.<\/p>\n\n\n\n How do banks and fintech companies safeguard client funds?<\/p>\n\n\n\n Banks offer deposit insurance to protect clients’ funds, usually up to a specific limit. This safety net, however, may not cover all the money in an account:<\/p>\n\n\n\n Bank deposit protection schemes are like the limited number of lifeboats on the Titanic. Just as there weren’t enough lifeboats for all passengers, deposit insurance has a cap, and any funds exceeding this amount are not secured to be covered. –<\/strong> However, it is important to note that there are limits to the protection, and some investments and other products may not be covered.<\/p>\n\n\n\n Fintech companies, especially those with Electronic Money Institution (EMI) licences, handle client funds differently. They keep these funds in separate accounts. Key differences:<\/p>\n\n\n\n Similar to the safety protocols in “Jurassic Park”, fintech companies create isolated environments for client funds, ensuring that even if something goes wrong in the main system, your money remains untouched and secure.<\/p>\n\n\n\n +<\/strong> Clients’ money is not used for loans or operational expenses.<\/p>\n\n\n\n –<\/strong> Fintech protection may lack the government-backed guarantees that traditional banks offer.<\/p>\n\n\n\n Transferra prioritises the security of client funds<\/a><\/strong> by utilising segregated accounts, ensuring that customers’ money is kept separate from the company\u2019s operational resources, providing an extra layer of protection and peace of mind.<\/p>\n\n\n\n The trend in safeguarding money is increasingly focussing on enhanced security measures.<\/strong><\/p>\n\n\n\n This trend is driven by growing consumer concerns about data breaches, fraud, and monetary instability. According to the report titled “Gen Z\u2019s Top Priorities When Selecting a Financial Services Provider<\/a>” by MX and published by The Financial Brand, approximately 48% of respondents <\/strong>rank trust and security as top priorities when selecting a financial service provider.<\/p>\n\n\n\n This emphasis on data protection is leading financial institutions to adopt more stringent measures, such as increasing deposit insurance coverage and strengthening regulatory compliance.<\/p>\n\n\n\n Customer support is a critical element that significantly influences user experience and satisfaction. The approach to client assistance<\/strong> can have a direct impact on duties like resolving account difficulties, settling disputes, and getting aid during emergencies.<\/p>\n\n\n\n What aspects of the customer experience at banks and fintech companies are the most crucial?<\/p>\n\n\n\n Traditional banks often rely on in-person customer support, call centres, and limited online assistance. Several factors contribute to the overall satisfaction of their clients:<\/p>\n\n\n\n Depending on live help at a bank can be like “Groundhog Day”, where each visit or call feels like a repeat of the last, with the same questions asked and the same details being given, but little progress made. –<\/strong> However, reliance on call centres and limited online assistance can lead to slow response times.<\/p>\n\n\n\n Need customer support that fits your lifestyle? Fintech companies are known for their digital approach with multiple channels for assistance, including live chat, chatbots, and detailed FAQ sections:<\/p>\n\n\n\n Fintech\u2019s use of customer data for personalised insights is akin to the predictive technology in \u201cMinority Report\u201d \u2014 anticipating your needs before you even realise them, but occasionally missing the human touch in more nuanced situations.<\/p>\n\n\n\n +<\/strong> This digital infrastructure allows fintech companies to offer 24\/7 support, making it easier for users to resolve issues quickly and effectively.<\/p>\n\n\n\n – <\/strong>However, reliance on digital channels can sometimes lead to impersonal interactions, and complex issues may be harder to resolve without human intervention.<\/p>\n\n\n\n Transferra’s approach to customer support stands out by offering direct access to dedicated account managers<\/a><\/strong>, providing personalised, expert assistance rather than relying on automated chatbots.<\/p>\n\n\n\n The trend in customer support is moving towards enhanced digital service options.<\/strong><\/p>\n\n\n\n This trend is driven by the growing demand for instant, convenient solutions. A report by the Fintech Association of Consumers highlights that 87% of clients<\/strong> consider excellent customer service a vital factor<\/a> when choosing a financial provider. In 2024, customer support in Europe is shifting towards online service channels. Gen Z consumers prefer phone support, while boomers are using digital chat.<\/p>\n\n\n\n This shift to digital also emphasises how important self-service solutions are becoming. In order to cut down on the necessity for direct human connection, many customers now choose to use simple internet tools to address problems on their own.<\/p>\n\n\n\n When selecting a provider, consider those that excel in seamless integration across multiple platforms, including mobile apps and online services. Evaluate the variety and complexity of products available<\/strong>, such as savings accounts, loans, and investment options.<\/p>\n\n\n\n What technological advances distinguish fintech from banks?<\/p>\n\n\n\n Traditional banks have long been the cornerstone of the financial industry. Their core services typically include savings and checking accounts, personal and business loans, mortgages, and wealth management solutions:<\/p>\n\n\n\n Just as the Millennium Falcon in “Star Wars” is a reliable but outdated vessel in a galaxy of advancements, traditional banks offer stable but slow-to-evolve financial products, lagging behind newer technologies.<\/p>\n\n\n\n +<\/strong> For customers seeking peace of mind, banks provide an extensive range of dependable, tried-and-true services that address both simple and complicated financial demands.<\/p>\n\n\n\n – <\/strong>Despite these innovations, traditional banks often lag in agility and speed when compared to fintech companies, largely due to their size and regulatory constraints, resulting in less responsive product offerings.<\/p>\n\n\n\n Fintech companies are known for their agility and innovative approach to financial services. They have introduced a range of new features that are not only user-friendly, but also cater to specific customer needs:<\/p>\n\n\n\n Just as Joseph Cooper in \u201cInterstellar\u201d navigates through a wormhole to discover new worlds, fintech companies use cutting-edge technology to transport users to advanced financial solutions.<\/p>\n\n\n\n + By focussing on customer-centric solutions and leveraging data analytics, fintech companies provide a more tailored experience compared to traditional banks.<\/p>\n\n\n\n – However, the rapid pace of innovation and reliance on emerging technologies can sometimes lead to stability issues and regulatory uncertainties.<\/p>\n\n\n\n Transferra transforms financial management by offering a multi-currency IBAN account<\/strong> <\/a>that integrates with global payment networks like SWIFT and SEPA, coupled with real-time transaction capabilities across 180+ countries.<\/p>\n\n\n\n The trend in financial technology is characterised by heightened competition driving rapid innovation and expansion of services<\/strong>. This increasing competition results in lower fees and improved service quality for consumers.<\/p>\n\n\n\n Look for providers that offer clear, transparent pricing<\/strong> with minimal hidden charges, as this can greatly impact the overall cost of banking solutions. Consider how fees are structured, including account maintenance fees, transaction fees, and costs for additional services.<\/p>\n\n\n\n What are the bank and fintech transaction fees?<\/p>\n\n\n\n Traditional banks typically have a variety of fees associated with their services:<\/p>\n\n\n\n Much like Katniss Everdeen in “The Hunger Games” faces constantly shifting rules and hidden traps, banking customers encounter a fee system that is difficult to understand, with the potential for hidden charges and unexpected costs hidden beneath the surface around every corner.<\/p>\n\n\n\n + <\/strong>Traditional banks may provide personalised fee structures based on the account holder’s relationship, such as loyalty discounts or preferential rates for long-term clients, which can be beneficial for regular patrons. Many fintech services, such as digital wallets, peer-to-peer payment systems, and online-only banks, provide low-cost or no-fee options for basic transactions:<\/p>\n\n\n\n Fintech pricing is like the efficient resource management of the spaceship Nostromo in \u201cAlien\u201d: it\u2019s designed to minimise waste and cut costs. Still, just as the crew faces unexpected challenges aboard the Nostromo, users of digital financial services might encounter fees for premium services.<\/p>\n\n\n\n + This clarity and reduced cost structure are key advantages that attract consumers to fintech services.<\/p>\n\n\n\n – \u200b\u200bWhile fintech platforms often provide basic services at no charge or at a low cost, they may impose fees for advanced features such as increased transaction limits or currency conversions.<\/p>\n\n\n\n Transferra offers clear, itemised pricing<\/a><\/strong> with a fixed monthly fee and transparent costs for transactions and additional services.<\/p>\n\n\n\n The trend in pricing within the financial services is characterised by increasing transparency and lower fees.<\/strong><\/p>\n\n\n\n This trend is driven by the escalating competition between traditional banks and fintech firms, alongside increasing regulatory pressures to enhance transparency, leading to a more consumer-friendly pricing structure. Visibility of global financial operations poses a challenge to over 80% of companies<\/strong>, and more than 60% are dissatisfied with the clarity of their current provider charges (EY internal global research 2022<\/a>). When choosing a provider for opening an account, pay attention to how the company complies with regulatory requirements<\/strong> across different jurisdictions. Consider the provider\u2019s licensing, adherence to local laws, and the ability to adapt to changes to new policies. <\/p>\n\n\n\n What steps should fintech and banks take to ensure regulatory compliance?<\/p>\n\n\n\n Traditional banks operate under a well-defined and mature regulatory framework. These regulations encompass a wide array of standards:<\/p>\n\n\n\n The regulatory landscape for traditional banks is akin to the rigorous safety protocols aboard the spaceship Discovery One in \u201c2001: A Space Odyssey\u201d: it\u2019s designed to safeguard against unforeseen risks and ensure stability, though it may sometimes feel overly restrictive.<\/p>\n\n\n\n +<\/strong> These changes ultimately contribute to a safer and more robust financial ecosystem. <\/p>\n\n\n\n –<\/strong> Customers may experience more rigorous identity verification processes and need to provide additional documentation when opening accounts or conducting large transactions.<\/p>\n\n\n\n Fintech legislation is more flexible and constantly developing. The EU Digital Finance Package<\/strong> is a key regulation impacting the industry in Europe:<\/p>\n\n\n\n The fluid nature of fintech regulations can be compared to the ever-changing rules of the game in “Jumanji”. As players in the movie must adjust their strategies to the game’s unpredictable twists, fintech firms need to remain agile and responsive to evolving demands.<\/p>\n\n\n\n +<\/strong> For clients, this means the security and transparency of their investments, ensuring a more regulated and resilient financial environment.<\/p>\n\n\n\n –<\/strong> However, the dynamic and developing nature of these regulations can create uncertainty and complexity, potentially leading to increased compliance costs.<\/p>\n\n\n\n Transferra is committed to maintaining compliance with all relevant laws and regulations<\/strong><\/a>, including Anti-Money Laundering (AML) and counter-terrorism financing measures, adhering to UK, European, and international standards.<\/p>\n\n\n\nBanks: The old-school way<\/h3>\n\n\n\n
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+<\/strong> This face-to-face process has been the standard way banks welcome new customers, reflecting a more conventional and secure identity verification procedure and setting up accounts.<\/p>\n\n\n\nFintech: The digital-first approach<\/h3>\n\n\n\n
\n
![\"Banks](\"https:\/\/transferra.uk\/blog\/wp-content\/uploads\/2024\/09\/Transferra_open-a-new-IBAN-account.png\")
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The trend in account onboarding is shifting rapidly towards digital solutions.<\/strong>
This trend is driven by a transition in user behaviour, with more people choosing the ease and speed of opening a virtual account provided by fintechs. According to the BAI Banking Outlook Special Report<\/a>, 65% of customers<\/strong> are projected to engage with banks via digital channels \u2014 such as mobile apps, online platforms, and ATMs \u2014 reflecting a strong shift towards managing financial interactions without stepping into a physical office.<\/p>\n\n\n\n![\"The](\"https:\/\/transferra.uk\/blog\/wp-content\/uploads\/2024\/09\/Transferra_the-trend-in-account-opening.png\")
<\/figure>\n\n\n\nUser Interface and Experience<\/strong><\/h2>\n\n\n\n
How does the user experience in the banking and FinTech sectors differ from one another? <\/p>\n\n\n\nBanks: The legacy challenge<\/h3>\n\n\n\n
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Fintech: The user-centric approach<\/h3>\n\n\n\n
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– <\/strong>However, the rapid pace of technological updates in fintech apps can sometimes lead to frequent iterations in user interface design, which may cause confusion.<\/p>\n\n\n\n![\"Fintech](\"https:\/\/transferra.uk\/blog\/wp-content\/uploads\/2024\/09\/Transferra_user-experience.png\")
<\/figure>\n\n\n\n
<\/strong>
This trend is driven by technological advancements in mobile and cloud computing. Fintechs are leading in terms of client satisfaction due to their emphasis on modern, user-friendly designs. For example, companies like Chime and Varo have achieved satisfaction rates of nearly 90%<\/strong> for their apps, significantly higher than the 78% national average, as reported in the Rivel Banking Research Q1 2024<\/a> survey of 280,000 U.S. consumers.<\/p>\n\n\n\n![\"The](\"https:\/\/transferra.uk\/blog\/wp-content\/uploads\/2024\/09\/Transferra_trend-in-banking-user-experience.png\")
<\/figure>\n\n\n\nGeographic Restrictions<\/strong><\/h2>\n\n\n\n
Banks: Local focus<\/h3>\n\n\n\n
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Fintech: Global outlook<\/h3>\n\n\n\n
\n
– <\/strong>Fintech companies must follow regulations, which vary by country. Some services may be restricted based on your location or citizenship.<\/p>\n\n\n\n![\"Banks](\"https:\/\/transferra.uk\/blog\/wp-content\/uploads\/2024\/09\/Transferra_geographic-restrictions.png\")
<\/figure>\n\n\n\n
This trend is driven by the increasing globalisation of the economy, fuelled by factors such as trade, investment, and migration. According to FXC Intelligence<\/a>, transnational payment flows reached about $146 trillion<\/strong> in 2023, reflecting a rising demand for international financial operations, particularly in regions with robust digital infrastructure, such as India and Brazil.<\/p>\n\n\n\n![\"The](\"https:\/\/transferra.uk\/blog\/wp-content\/uploads\/2024\/09\/Transferra_trend-in-cross-border-financial-services.png\")
<\/figure>\n\n\n\nSafeguarding Customer Funds<\/strong><\/h2>\n\n\n\n
Banks: Deposit insurance schemes<\/h3>\n\n\n\n
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+<\/strong> If the bank fails, your capital is protected up to the insured amount. The government guarantees you’ll get your money back within that limit.<\/p>\n\n\n\nFintech (with EMI licence): Segregated accounts<\/h3>\n\n\n\n
\n
![\"Traditional](\"https:\/\/transferra.uk\/blog\/wp-content\/uploads\/2024\/09\/Transferra_safety-of-money.png\")
<\/figure>\n\n\n\n![\"The](\"https:\/\/transferra.uk\/blog\/wp-content\/uploads\/2024\/09\/Transferra_trend-in-the-banking-industry.png\")
<\/figure>\n\n\n\nCustomer Support and Services<\/strong><\/h2>\n\n\n\n
Banks: A reliance on call centres and in-person assistance<\/h3>\n\n\n\n
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<\/strong>+<\/strong> Traditional banks offer the option to speak with a representative, providing a sense of personal connection and trust during complex issues.<\/p>\n\n\n\nFintech: Digital customer support channels<\/h3>\n\n\n\n
\n
![\"Client](\"https:\/\/transferra.uk\/blog\/wp-content\/uploads\/2024\/09\/Transferra_customer-support.png\")
<\/figure>\n\n\n\n![\"The](\"https:\/\/transferra.uk\/blog\/wp-content\/uploads\/2024\/09\/Transferra_trend-in-customer-service.png\")
<\/figure>\n\n\n\nInnovations and Additional Services<\/strong><\/h2>\n\n\n\n
Banks: Traditional product offerings<\/h3>\n\n\n\n
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Fintech: Innovative features and integrations<\/h3>\n\n\n\n
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![\"Fintech](\"https:\/\/transferra.uk\/blog\/wp-content\/uploads\/2024\/09\/Transferra_innovations-and-extra-offerings.png\")
<\/figure>\n\n\n\n
This trend is driven by the need for financial institutions to stay competitive and meet evolving customer expectations, as highlighted by research from Aite-Novarica Group<\/a>, supported by Finastra, which indicates that around 94% of banks<\/strong> plan to invest more in modern systems to support increasing demand for enhanced payment capabilities. Fintechs are actively adopting new technologies such as blockchain and artificial intelligence. <\/p>\n\n\n\n![\"The](\"https:\/\/transferra.uk\/blog\/wp-content\/uploads\/2024\/09\/Transferra_trend-in-financial-technology-1015x500.png\")
<\/figure>\n\n\n\nFees and Pricing Structures<\/strong><\/h2>\n\n\n\n
Banks: Traditional fee models<\/h3>\n\n\n\n
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–<\/strong> However, the lack of transparency and potential for high fees can lead to unexpected expenses and complicate budgeting for customers.<\/p>\n\n\n\nFintech: Often lower fees, transparent pricing<\/h3>\n\n\n\n
\n
![\"Banks](\"https:\/\/transferra.uk\/blog\/wp-content\/uploads\/2024\/09\/Transferra_pricing-structures-.png\")
<\/figure>\n\n\n\n
This focus on transparency and reduced costs is particularly appealing to younger consumers who actively use digital platforms for financial management.<\/p>\n\n\n\n![\"The](\"https:\/\/transferra.uk\/blog\/wp-content\/uploads\/2024\/09\/Transferra_the-trend-in-account-opening-1.png\")
<\/figure>\n\n\n\nRegulatory Environment<\/strong><\/h2>\n\n\n\n
Banks: Established regulatory framework<\/h3>\n\n\n\n
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Fintech: Evolving regulations, challenges, and opportunities<\/h3>\n\n\n\n
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![\"Client](\"https:\/\/transferra.uk\/blog\/wp-content\/uploads\/2024\/09\/Transferra_Compliance-with-regulations.png\")
<\/figure>\n\n\n\n
![\"The](\"https:\/\/transferra.uk\/blog\/wp-content\/uploads\/2024\/09\/Transferra_trend-in-the-regulatory-environment.png\")
<\/figure>\n\n\n\n![\"Banks](\"https:\/\/transferra.uk\/blog\/wp-content\/uploads\/2024\/09\/Transferra_Bank-vs-Fintech.png\")
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