Finergy — Can Banks and Fintechs Together Collaborate and Shape a Customer-Centric Business Model?

WHY NOT?

Having been a consumer banker for three decades and now an entrepreneur in an advisory role for banks and fintechs, I can empathise with both sides and take a balanced view of their predicaments and challenges.

During my banking career across Asia, Middle East, Africa and Europe markets, more specifically since 2010, there wasn’t a monthly executive meeting without an agenda on “What should we do to counter the fintechs”. While over the years, this trend has gradually shifted towards “How can we partner with fintechs”, there is still that uneasiness in the banking boardroom. Interestingly on the other side, fintech’s are by and large always trying to explore how their solutions can support banks and not compete with them.

With all due respect, banks aren’t the best in customer experience. Though the intent is very much there, the execution isn’t. Priorities like risk and compliance, balance sheet and p&l, managing costs and interest rate volatility, et all takes precedence. I do think these priorities aren’t misplaced as clients place trust and safety on top of everything else as an index to choose a bank. With the bankable segment now fast shifting towards those who haven’t lived in a non-smartphone environment, consumer experience is rapidly becoming an equal if not superior index. This means that given the trust and safety indices are hygiene, the tie-breaker is shifting to the CX Index. However, to me this isn’t an either/or. What then stops banks from partnering with fintechs?

If you peel the problem, the average age of any of the top 10 banks in any market is not less than 50 years and there are banks that are over 150 or even 200 years old in most large and mature markets. As against this, in any market the average age of a fintech is probably less than 10 years and most fintechs are less than fiveyears. This creates two challenges. One is that banks are too embedded in their thinking and practices, to be able to shed legacy. Two, trusting a fintech who has been in business for a few years does not come naturally to banks.

Having said this, to be fair, across a few markets especially UAE, banks have started their own fintech/startup incubators and accelerators and have started partnering actively for both funding fintechs and also embedding their solutions to solve mainstream banking problems where they find a strategic fit. This trend needs to accelerate and more banks need to come forward and support fintechs. With a good view on both sides, I see a lot of complimentary skill sets and capabilities. These partnerships will benefit the end consumer with a superior experience and the banks and fintechs with delta business plus delta NPS.

The author is a consumer banker with international experience across the value chain of consumer banking over three decades.