In recent years, the pace of innovation in the finance industry has surprised the finance professionals and industry analysts alike. FinTech which usually relates to the small and start-up enterprises focuses on developing the technological solutions that are innovative and efficient such as mobile payments, financial management, online banking, etc.
Many technology-driven start-ups are further emerging, motivating the financial institutions to invest in digital technologies. The boom has been applauded by many of the financial service providers as it offers increased efficiency for the consumers.
As per the sources, about 81% of the surveyed bank executives stated that collaborating with the partners was the best strategy for achieving digital transformation.
This process is facilitating them to establish themselves in the market.
The journey from disruption to collaboration
For years, most of the financial institutions have been product-centric. But the frequent financial crisis has driven many of them to modify their approach. Today, many of them have adopted the customer-centric approach. The banking industry is rediscovering customer service to a new level. The technology emphasizes the merging of the digital trends with the expectation of the customer that results in the ultimate empowerment of the customer.
FinTech offers 24/7 access to the bank customers and the services are available through the digital channels. By 2020, it has been estimated that social media would become one of the crucial channels for engaging, connecting, informing, and understanding the customers.
How the partnership would shape the future of finance:
- Amplification of the reach: Banks are now much focused to increase the utilization of the SaaS solutions being offered by some of the FinTech providers. This helps the banks in putting more effort into easily integrating and streamlining the operational capabilities in the banking system. The APIs also help the FinTech for developing the value-added features and solutions that could be integrated with different banking platforms.
- Providing smart solutions: Everyone in today’s world needs smart solutions. The growing customer needs have forced the industry to look out for solutions that are robust, quick, and flexible. FinTech has been quick to address this need, which has been long ignored by the banks across the world. It has been helpful for developing a defined and effective solution that could resolve any challenges faced by the customer.
- Reducing the costs: Collaboration with the leading FinTech could be one of the strategic leaps for reducing the cost and the risk associated with the change. It also presents a very strong potential for the transformation into client-centric.
The greatest value-added benefits for banks when it comes to partnerships are:
- Ability to collaborate with FinTech companies to form a solid structure of improvements towards innovation;
- Continuously engage their long-standing customer base with advanced, digital options;
- Quickly improve the customer experience through the agility and new insights from fintechs.
Most of the financial institutions have to revamp their approach
Some of the different types of FinTech partnerships are:
- SaaS( Software as a service): FinTech companies sell their technology to the financial institutions in a white-label offering which involves banks branding the product
- Co-branding: It is a strategy for both the tech and FinTech companies for reaching new clients and customers.
The disruption in the financial industry is seen as a positive change for the industry as a whole. The combined partnership of the FinTech and banks promises to yield the best of both worlds. FinTech partnership is now seen in both B2B and B2C offerings.