FinTech’s emergence has caused fear in the hearts of some in the financial industry. Writers and analysts often predict that the banking sector will “lose” because of FinTech. Yes, FinTech can be disruptive, but it is not a threat to banking.
FinTech fulfills our financial needs with far more ease and comfort than ever before, mainly because FinTech services can be accessed with websites and apps. But that doesn’t mean conventional banks will become extinct anytime soon. In fact, partnerships between banks and FinTech would benefit both parties. They can create an unexpected synergy.
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Banks Need Technology, FinTech Can Provide It
In today’s digital era, we all need technology more than ever before. So do banks. Consumers of financial services now demand easier access and simpler processes. Meanwhile, FinTechs have the technology banks need to become more digital. By working together with FinTech, banks can become more efficient.
Data Security Cooperation
Data security has always been one of the main issues of the financial industry. Most banks are (and should be) vigilant when it comes to data security upgrades. This opens opportunities for FinTechs to form partnerships with banks. While credible FinTech startups with have strong data security in place to fend off cybercrime, FinTechs generally focus more on customer experience. Cooperation and strategic partnerships between banks and FinTech can balance customer experience and data security.
Omnichannel and Cashless Challenges
To create a seamless experience across all channels for customers, many banks have adopted the omnichannel business model. The omnichannel model is implemented with the aim of creating a cashless society. But the cost of omnichannels can lead to a negative return on investment, especially in Asia, where not all countries are technologically advanced enough in terms of traditional card penetration. Yet this challenge is an opportunity for banks and FinTech to collaborate, as banks provide a foundation and a larger market reach, while FinTech provides intellectual property and innovation.
Collaborative, But Still Competitive
Cooperation between banks and FinTech can help fulfill each party’s agenda. But, of course, collaboration does not eliminate competition. The rise of FinTech creates both challenge and opportunity for banks. FinTech is more geared towards speed and customer experience, while banks provide an infrastructure and an existing base. Both parties can work together to optimize their roles, but each side also needs to keep innovating on its own.
Although FinTech is a new player in the financial industry, it can play along and even benefit “older” players such as the banking sector. Banks and FinTech can create a positive collaboration and synergy to present more seamless financial services to their customers.