Most important question for Banks and Fintechs: What do the customers want?

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....