It has been many times mentioned that banks today are facing a difficult task in strategising their digital transformation in order to compete with Fintech companies who are offering intelligent financial solutions through the help of technology. With banks facing various obstacles, they must clarify their train of thought to understand how they can offer the best customer experience through digital platforms. With Fintechs primarily working on just that, one might wonder why banks would not consider a collaboration with such innovative companies.
'The successes of top Fintech firms is fundamentally through their customer-centric approach in offering users a variety of features and financial solutions in a straightforward, digital manner - a factor which banks are now aiming to achieve.'
As more and more Fintech start-ups emerge into the scene, such a collaboration could bring prosperity to both organisations. The successes of top Fintech firms is fundamentally through their customer-centric approach in offering users a variety of features and financial solutions in a straightforward, digital manner - a factor which banks are now aiming to achieve. Aspects of speed, simplicity, security and customisation are all facets of a successful digital platform which demands expertise in various areas of Tech to implement. That being said, with today’s war for talent, it is becoming more difficult for banks to attract and retain top talent in Tech, with professionals in this area more attracted to companies who are already paving the way forward in digital innovation. Despite banks now focusing on digital growth, they are still somewhat labelled as traditional in the minds of the Tech community, perhaps due to banks’ late adoption in technology. This is indeed a challenge for banks, and in addition and relevance to a previous article, an alternative solution to the Tech talent gap in Banking would perhaps be for banks to collaborate with Fintechs in their quest for digital success.
Why a Collaboration Could Work
Indeed, such a collaboration could bring value to these sectors through a win-win situation, as banks would be supplying up-and-coming Fintechs with additional funds and exposure for future growth, whilst Fintechs would be providing banks with enhanced efficiency and reduced costs through an optimised data-driven approach, well designed and developed interfaces and bolstered cybersecurity, to mention but a few. Thus, strategies can be significantly improved to ensure operational excellence and clear goals for banks, whilst Fintechs would be benefitting from brand awareness, increased funding to venture into new innovations as well as a long-term partnership built on trust and ambition.
One can clearly realise how banks and Fintechs can work hand in hand to achieve great success, as one’s strength is the other’s weakness, and vice versa - Fintechs possess the effective mindset for digital innovation through a customer-centric philosophy which drives revolutionary data-driven infrastructures, these being attributes which banks crave in today’s digital age. On the other hand, banks possess brand recognition and trust, insight on matters regarding regulation and compliance, sufficient capital, as well as a broad customer base, these being qualities which Fintechs are not known to have. A collaboration therefore works well on paper, however there are some key points of focus to take into consideration when actually making it work.
Developing a Shared Mindset
The aim for banks is not to become a Fintech organisation, but to develop a mindset through which a Fintech framework can be generated and implemented in their traditional operations. By moving away from a concept of competition and into one which fosters team-playing, banks and Fintechs can integrate their people to work towards a common goal, with professionals in Fintech being given the opportunity to progress in their careers by contributing to a revolutionary change in banking. In terms of recruitment, software development in Fintech will be an area which will greatly benefit - junior software developer jobs would also rise with the supply, as careers in banking and finance will now expand in the face of technology.
'The aim for banks is not to become a Fintech organisation, but to develop a mindset through which a Fintech framework can be generated and implemented in their traditional operations.'
A bank could collaborate with a Fintech company which specialises in automation and AI in order to possess a framework of faster and more efficient data management and intelligence, or perhaps with a Fintech which focuses on providing Blockchain-based financial solutions for users. The collaboration between banks and Fintech companies would mean that the lack of in-house talent in Tech within the Banking sector would be resolved as an innovative culture would be adopted. This innovate culture would be breathing new technological concepts for change which banks would need to understand and accept, thus, the ability to think along the same lines as a Fintech company is necessary for a successful collaboration.
'The collaboration between banks and Fintech companies would mean that the lack of in-house talent in Tech within the Banking sector would be resolved as an innovative culture would be adopted.'
At the same time, Fintechs must understand the bank’s traditional services and how they can translate them on to a digital platform through desktop and mobile in a way which is user friendly. Further to this, they must work closely to the bank to safeguard its brand image and stay through to its concepts, keeping up to date with its compliance and regulatory responsibilities and securing its internal and external (customer) data in the process.
The sense of leadership must be shared between both the bank and Fintech firm in question, as a great collaboration feeds off understanding and the hunger to achieve a common goal. The need to constantly invest and adopt a proactive nature in today’s fast-moving financial landscape is essential to maximise growth and scalability. In addition, both organisations must display willingness and flexibility to grow together through a unified effort in order to reap the benefits of digital innovation in banking.
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