For many years, traditional banks have seen FinTechs as competitors—eager to disrupt the financial services industry’s business models, particularly when it came to sharing technologies such as artificial intelligence (AI), machine learning (ML) and big data. Today, FinTechs are no longer seen as a threat to banks, but as collaborators.
The majority of FinTechs are startups, and there is tremendous potential for synergy between FinTechs and banks. FinTechs bring a singular focus on a specific problem, creating innovative solutions using connected technologies and new operating models. FinTechs lack customer base, funds, regulatory experience and ability—all of which traditional banks possess. This creates a win-win situation for partnership.
Providing an engaging and seamless customer experience is the focal point of bank and FinTech collaboration. This is achieved through the introduction of sustainable innovative technologies delivered as end products by banks and FinTechs alike.
This means that banks can take a good product and with the assistance of FinTech innovation, improve it over time to serve customers better, and gradually link into new markets. This results in a more sustainable and collaborative model, supporting ongoing customer-centricity.
Understand Customer Journeys
The key to understanding the customer and turning creative, lab-based concepts into functional solutions lies in banks adop ting two methodologies popular with FinTechs: design thinking, and agile development/methodology. Banks seldom invest in these approaches and rarely place 'the human factor' at the center of product and service development. Working together, banks and FinTechs can leverage the knowledge and expertise from FinTechs to drive customer-centricity.
As a human-centered framework, design thinking identifies and removes pain points in the customer journey to understand why customers would want to use a banking app, and more importantly, what steps they need to take to ensure their app meets and delivers all customer expected outcomes.
Collaboration is preferable for banks, as FinTechs provide solutions that are costly for banks to develop in-house and offer a simple solution that’s not cost and knowledge inhibitive. For banks to become more innovative, they must change internal mindset to embrace change and consider possibilities offered through partnership.
