On the back of the digital revolution brought about in financial services, FinTech has grown quite strong across the globe, creating great opportunities for every business. Initially, FinTech startups were perceived as a threat to the traditional banks, with many saying that FinTech created terror among the latter. However, today you may find an unexpected synergy between banks and FinTech, forming a win-win relationship.
A study conducted by Accenture, “The Future of FinTech and Banking: Digitally disrupted or reimagined?”, describes the impact of FinTech on banks and how banks should respond to this development. Based on the study, Accenture found that there are three aspects of FinTech that can enhance traditional financial services.
1. Innovation
Innovation is at the heart of the digital revolution. To adapt to the present times, banks must open their minds to outsiders as a way of encouraging innovative ideas. The FinTech industry needs the banks’ help to work seamlessly with their core banking system. In return, the banks need FinTech to innovate and upgrade their banking system.
A success story in this respect is of Fidor Bank. Fidor Bank provides open APIs (Application Program Interface) to third parties that connect to existing core banking platforms. The bank offers its customers a range of modern services, such as lending money to friends, sending money via Twitter, and even arranging an emergency 24-hour financing.
2. Collaboration
Banks can also grow through forming alliances with complementary FinTech players. Collaboration with players in different industries serves as a new way to generate value. However, this collaboration is often hindered by different organizational cultures. Nevertheless, differences can be managed by creating a flexible framework that promotes such collaboration.
3. Investment
Most FinTech players are startups – innovative businesses facing capital issues. This is where the FinTech industry needs the capital-rich banks. On the flipside, banks lag in innovation. Thus, one likely sees most banks’ innovation coming through investment into FinTech startups.
Seeing foes become friends is incredible, especially when the friendship is collaborative. This sums up the fact that the FinTech industry does not exist to compete with, or displace the banks. Instead, both can enter a mutually beneficial relationship, and can be your greatest partner in financing your business.