Instead of highlighting the competitive landscape between emerging fintech and traditional banks, there is the potential to collaborate and generate more value. The fintech industry is accelerating innovation in finance industry, but many startups’ progress is hindered by strict regulations, data privacy and security concerns. Many traditional banking institutions are beginning to partner with fintech companies to expand and accelerate their digital plans.
The digital drive is forcing established banks to move from legacy systems to innovative solutions. It’s unlikely that fintech companies can take the stronghold of the market, but traditional banks will have to determine whether they decide to introduce their solutions or partner with fintech companies to maintain the edge over other competitors. If customer expectations continue to rise and demand the types of products and services offered by fintech startups, incumbent finance companies will have to find a solution to deliver new products or collaborate with those that can.
How fintech represents innovation in business
The rise of fintech has caused many finance leaders to adapt their core focus concerning data and digital platforms, utilising data and new services to enhance efficiency and security. Open-source software, SaaS and other architecture have become critical for tech and finance organisations exploring fintech services.
Technological progression and innovation are critical parts of fintech development, and they will likely continue to disrupt business activities within the financial industry. Many traditional finance businesses have been encouraged to be more creative as fintech companies promote new and innovative digital features and continue to gain further popularity across the financial industry.
Fintech represents innovation and is why many traditional finance companies struggle to maintain pace with new trends continuing to disrupt the industry. While fintech companies have the agility and a customer-focused approach to deliver more flexible solutions and a better user experience, the traditional banks have the size and experience, which translates into consumer confidence. Fintech expertise is often used by finance companies to improve and automate procedures and create detailed insights into their clients.
The range of fintech developments has expanded to payments and investing in new business models like blockchain, insurance-tech and data-driven marketing. The finance industry is experiencing a significant transformation on a large scale, predominantly due to technology: cloud computing, big data, robotics and artificial intelligence, and the shift in virtual and open banking and fintech. Product and software management, cyber security, customer experience, and data analytics are skills required not by just the fintech industry but also by any technology business.
There are many benefits that could transpire from a partnership between corporates and fintech. The integration of technology and greater access to data generate better compliance, security and lower privacy risks. Open banking enables third parties to create products and services around the offerings of a financial business. This collaboration would extend the potential of ecosystem-based finance, where banks and other finance companies can work with non-financial companies to create a seamless customer experience.
Finance integration has been a growing trend in the last year, with many finance companies looking to be providers to non-banks and non-financial groups looking to deliver a customer experience or service involving financial products as part of their offering. As the demand for rapid financial transactions has increased, banks and other financial businesses have been integrating fintech products within their standard practices. The ultimate purpose of fintech, aside from its focus on innovation, is to adopt technology to provide customers with financial requirements and deliver the best experience.