Fintechs: a partner, not a predator
The rise of financial technology – or “fintech” – firms is often characterised in terms of “disruption” and “displacement,” as though the fintechs are destroying incumbent business models and putting traditional businesses to the sword.
Technology is one of the key drivers impacting large financial institutions today. The reality is that instead of being threatened by emerging fintechs, firms have an opportunity to leverage fintechs to increase their existing technology capabilities to ensure the service provided to their clients remains relevant. By partnering with the right technology service providers, opportunities for both new business and expanded client offerings, will prepare companies for the future of investing.
Developing technology in-house has become a costly process for larger institutions and balancing the benefits with the rewards is a difficult thing to get right. Fintechs are certainly bringing some transformative solutions to bear on many different areas of the financial services value chain, but they are usually focused on win-win situations: where there are legacy systems and processes that encumber transactions, the fintechs can provide the innovation to streamline the way that the business is conducted.
For a variety of reasons, financial services firms may find themselves constrained from being able to focus their energies on innovation, and build (or improve) their own capabilities in various areas. This is the opening that fintechs have used, to build and offer solutions to clients need, or “pain points.” Through collaborating with fintechs, financial services firms can quickly close the gaps in their offering and solve their customers’ pain points, without having to develop the solution themselves.
Fintechs have the benefit and advantage of their smaller size and they move fast. They have the expertise to stay on top of emerging technology and develop offerings which larger companies can leverage. Collaboration to create effective partnerships with clients will change the way innovative products and services are offered in the financial services industry.
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