To keep pace with rapid changes in the industry, many banks and other financial services institutions are reconsidering how they feel about fintech firms — and exploring partnership opportunities. This month’s FIN News Alert highlights The Financial Brand article, “Banking Options Narrow: Partner or Acquire Fintech Firms,” and outlines how banks are increasingly collaborating with fintech firms, investing in them or even acquiring them altogether. Here are the key takeaways:
Growing Challenges …
- In PwC’s latestGlobal Fintech Report, 88% of legacy banking organizations mentioned worries about losing revenue to fintech companies in areas such as payments, money transfers and personal loans.
- Reports now show the amount of business at risk to fintech companies has grown to an estimated 24% of revenues.
- Other studies point out that only 39% of surveyed consumers plan to continue using solely traditional financial services organizations. They are increasingly looking to use fintech companies.
Partnership Has Its Rewards …
- To drive increased innovation and embrace efforts to sharpen operational efficiencies, traditional financial organizations are increasingly collaborating with fintech companies.
- As some banks struggle to meet customer expectations and deliver new technology innovations, a fintech partnership offers strong promise.
- Even with the benefits of fintech partnering or acquisition, banks should work to address challenges with legacy IT architecture, operational silos and leadership culture.
- What’s in it for the fintech firms? Many are realizing it takes more than a great solution to attract a strong customer base, and some lack the capital for promotion and product support.
To gain access to customers and capital, fintech companies are finding that partnership with an established banking organization is the logical next step.
Want to read more about collaboration between banks and fintech firms? Check out our expert perspective that reviews how community banks and fintech companies are working together.