If you’ve read any fintech news lately, you’ve probably seen this headline:
“FINTECHS DISRUPTING THE BANKING INDUSTRY: BANKS, PREPARE TO DIE!”
(Ok, we’re exaggerating, but you get the idea.)
Maybe this headline makes you roll your eyes. Or maybe it makes you worry about your business. Either way, you’re probably as tired of hearing it as we are.
It’s true that fintechs are expanding into banking territory, but is it really as dire as the headlines suggest? Is your bank doomed to be killed off by a fintech?
We don’t think so. In fact, we think it’s more likely that a fintech is your new best friend.
The reality is, fintechs and banks aren’t as different as the headlines make them sound. In fact, they can — and should — work together.
Don’t believe me? It’s already happening.
Some of the biggest banks are actively investing in fintech companies because they recognize the value of the innovative services they offer. Wells Fargo and Barclays, for example, have both launched accelerator programs to nurture innovation and growth in new fintech companies. At the end of the program, these banks partner with the companies they believe will drive value for their business.
Other banks have bought emerging fintechs outright or plan to acquire them in the next 3-5 years.
So what do these banks know that others don’t?
They recognize that banks and fintechs work better together than separately for three key reasons:
1. They have the same goals
Regardless of their differences, banks and fintechs are trying to achieve the same thing: building a successful business by offering valuable financial services. And to do that, they have to meet market demand and customer needs.
One of the strengths of fintechs is that they’re hyper-focused on customer service. Many banks want to improve their customer experience, but often lack the technical resources to do it. When banks and fintechs work together, they create more customer-centric products and services that drive profitable growth.
2. They have resources to offer each other
Fintechs are first and foremost technology companies; they build innovative banking products and services using the latest technology available. As a result, they’re often able to solve complex problems faster than banks can with their existing technology.
But banks have valuable resources too. They have established infrastructure and customer bases, key advantages fintechs generally lack.
When fintechs and banks collaborate, they can share these valuable resources and achieve more together.
3. They make an agile team
Innovation is the name of the game for today’s banking industry. And that means adapting to a rapidly changing market by seizing opportunities wherever they come.
Separately, banks and fintechs can only do so much to develop new products and services. But with their combined resources and unique approaches to product development, banks and fintechs are able to adapt to market changes more rapidly. Partnerships between banks and fintechs foster agile development that benefits both businesses and their end users.
A win-win-win proposition
While they may seem like an unlikely pairing, fintechs and banks mutually benefit from partnerships with each other. By pooling their resources and developing innovative new banking solutions together, they go further than they would on their own.
Ultimately, these partnerships are a win-win-win. Banks and fintechs achieve their business goals, and their customers get the very best banking services. And that’s a future we can get behind.