Big banks and fintech startups: Rivals or allies?
Technology continues to drive the marketplace forward, particularly within the financial services industry
When fintech first came on the scene, the term was generally applied to the technology used in the back-end of financial institutions.
Nowadays, fintech is at the forefront of banking, giving rise to completely automated financial services with peer-to-peer lending platforms, cryptocurrency and internet banking revolutionising the way people bank, borrow and invest.
These innovations in technology are making way for a financial and technology crossover space, where fintech and big banks are being forced to either compete or collaborate.
Big banks resistant to change
Big banks have been under increased pressure from fintech startups, particularly when this current tech-savvy generation is finding the offerings of internet banking and peer-to-peer services more enticing.
Many argue that big banks are designed to resist change, and instead of undergoing a digital transformation, these establishments are setting out to compete against fintech to kill change.
A lot of systems inside a bank, such as risk and compliance functions, are in place to stop such changes from happening. The main argument big banks have against collaborating with fintech is that it creates risk.
In the UK, the Bank of England admitted that fintech could disrupt the stability of funding of incumbent banks. There is fear that in this ever-changing landscape, fintech’s lucrative services could drive consumers away from the big banks.
On an existential level, fintech is raising the bar on how consumers think about banking. Not only do fintech’s provide great products, offers, and transparency, but they also provide a very high standard of customer care, despite not having the same level of human interaction as traditional banks do.
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Source: Big banks and fintech startups: Rivals or allies? | e27
