Last week I asked a would a bank has 30.000 technologist vs 10 technologist? The
idea in that article was, at the age of cloud, PSD2 and APIs the logical thing
for the banks to do is collaborating with Fintechs and not investing anymore on
their legacy IT systems.
It is on paper a very good idea but rather than the technical
planning of this good idea I believe the strategical planning of it is more important.
What is going to be the strategy behind this cooperation and what is the most
important thing than Banks and Fintechs must provide?
Lets start with the question “does a Fintech/Bank
cooperation makes sense?”
If we look at the picture from the Fintechs’ perspective; given
that the Fintechs have the latest technology, that are mostly cloud native,
practical, flexible and API capable they have some technological advantage over
the Banks. Their time to market is a lot faster, they can try and learn quickly
and adapt agile way of work effectively.
On the other side of the equation banks also have lots of
advantages over Fintechs.
- Money means trust. And Banks won the trust of their
customers over years and they have very good reputation.
- In our era where cyber crime has an impact of more than USD 1 trillion every year on the
global economy, security means everything and security is another area
where Banks excel over Fintechs.
- Banks have built very extensive know how on regulatory
and compliance issues over the years and they have good reputation in the eyes
of regulators.
- And most important, Banks have huge customer base for
which the Fintechs would die for.
So both parties advantages over the other one and it makes sense for both parties to cooperate; but the question is: "on which ground should they meet?" There is only one
answer to this question: They should meet at the customers’ expectations.
The most important thing for the Fintechs and Banks should
be easing the customer pain points and making the customers happy by providing
the solutions they expect.
Banks should make their investments in business strategy and customer
experience rather than legacy IT systems. Don’t forget that IT stack is the tool that will take the
Banks to their strategic targets and to customer satisfaction. Hence, number
one priority must be the customer experience.
Banks should be thinking
how they are going to provide ease of mind
for the customers, how they are going to make the customers comfortable. Customers
should not have any doubts or question marks that the process will be long,
cumbersome, painful for them. They should know that their financial service provider
will give them a smooth and easy solution whatever the service or product they
ask for.
There is a food for thought for the Fintechs as well when it comes to
customer experience. Their initial question should not be “what the banks
cannot do at the moment?” or “what can we do with our technical capabilities?” The
only question that should be asked by Fintechs and Banks is: “What does the
customer want and how can we provide it better?”
How should
be the cooperation? I believe the
cooperation should be done through a platform business model. Banks
should provide a platform for the Fintechs where they provide best services
with upmost security for their customers. Fintechs should come into that
platform as service providers and customers can choose the service they want
from the platform.
Whenever the customers’ need or expectations change; platform
owners, banks, can remove outdated providers and plug in new providers to the
platform. Customers’ needs and expectations are changing constantly, therefore
the platform and the offerings of the platform should also change constantly. I
see a lot of Fintech acquisitions by many Banks but this is an old way of
approach to a flexible world.
Bankers are praising Airbnb or Uber not owning
a single car or a single room but they are trying to own a lot of Fintechs. Interesting
approach....
