What does the future look like? Financial services centred around quality and collaboration where the client comes first.
The financial sector is on shaky ground. We live in a time of disruptive trends and new developments. The main factor causing the current shift in financial services is the consumer. Consumer behavior is changing fast and customers are asking for more—and rightly so.
‘Fintech’ is an ubiquitous term with a wide definition, making its value hard to immediately grasp. People generally understand that it deals with banking, technology, and user-experience. But why is it getting so much buzz? Fintech companies are using technology to manage the demands and needs of consumers with a focus and efficiency previously unseen. These new players are particularly suitable as partners for banks as they have potential as a delivery system for continued quality and innovation. They have the ability to help banks innovate, build trust and create new user experiences.
Artificial Intelligence (AI) will play a central role in this. We can use AI to identify patterns in consumer behavior, which will enable the financial industry to work faster and better. But the next move needs to be made by the banks. Some are hesitant as they fear losing control over some aspect of their relationship with clients.
I would encourage them to take a step back and consider the following. Fintech isn’t a revolution, but more of an evolution. Banks will outlive most companies with Fintech propositions. That being said, if banks want to remain relevant they need to—just like any other organisation in a competitive environment— listen and take notice of market demand. And the message is clear. Industry growth shows that Fintechs have picked up on something that customers feel they were missing. Should banks be thinking along the lines of ‘beyond banking’ to stay relevant? Not in my opinion. Because banks are a crucial part of our economic system and will be for the foreseeable future. There is however a wave of innovations that the industry needs to adapt to. The rise of Fintechs initiated some much-needed wake-up calls and healthy competition in the market, something that was lacking after the financial crisis of 2007. That being said, there are currently too many Fintech organisations, many of which are not profitable and probably never will be. Therefore a relevant question we should ask ourselves is: are there too many?
Ultimately banks are at the center of the financial services industry. They have a vast amount of knowledge and experience with managing complex processes and operations. Over the years they have also developed strong customer care and compliance functions. Room for improvement mainly lies in the user experience realm and being more aligned with customer demand. As this is at the core of the Fintech industry, partnerships are a natural fit. Alongside these relationships, there is also value for banks in seeking cooperation with tech suppliers or transactionally driven organisations that are relevant for the consumer. My personal advice to banks would be: don’t do what a partner can do better. Collaboration will allow you to make choices in the interest of your customer. While it might seem less beneficial to your bank and shareholders in the short-term, partnerships will prove strategic and sustainable in the long-term. Yes, you give up some control but it’s for the right reason—quality. The end-result? A joint future where the client comes first.
Originally published December 16 2016 , updated June 12 2018