Are FinTech companies killing banks ?
You must be experiencing the buzz of FinTech lately. Well, who isn’t ! FinTech is a market that integrates finance and technology. We are amazed to know that according to a recent report by Accenture , the global investment in Fintech has jumped from $930 million in 2008 to over $12 billion by the beginning of 2015. Europe experienced the highest growth rate, with an increase of 215% to $1.48 billion in 2015. FinTech is applied to the segment of the technology that is disrupting sectors such as mobile payments, money transfers, loans, asset management and retail investments etc.
FinTech vs. Banks
All these stats from the Accenture report are putting pressure on banks, not least because few consumers who use snazzy FinTech services ever return to their banks thereafter. But it is hard to see FinTech killing them off . As according to a survey by The Economist Intelligence Unit (EIU) in 2015, which is based on more than 100 senior bankers and 100 FinTech executives which seeks to determine their respective views on the impact of financial technologies, it was noticed that banks and FinTech startups have more business interests in common than issues that divide them. Survey highlights the strengths and weaknesses of both banks and Fintech players. While banks are advantaged by their reputation for stability (42%), their customers’ loyalty (41%) and their existing customer base (40%), bankers believe that their lack of a clear strategic vision for digital (49%), the danger of security breaches (42%) and the fact that the culture does not suit to rapid change (38%), are their main weaknesses.
Collaboration or Co-Innovation
One thing is clear, If FinTech doesn't kill banks, it might instead sap the sector's profitability. Competition is good, especially if it creates inroads for new and currently under-served consumers to access and use traditional financial services. FinTech startups have vision that traditional banks have lacked. They see under-served consumers as an emerging market, especially in developing countries where technological advances like mobile banking have been a key driver of financial inclusion. The concepts of collaboration – or “co-innovation” – are becoming more important within the financial services and technology industries. Here is huge value for both large banks and smaller FinTech companies to work together and tap into the scale and scope that banks have.
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