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....

Does your job title change your character? There is an antidote for that

Some people defines themselves with their job titles. They believe that, the title they “earned” is a very important quality of them and they start to live with the title and live for the title. 

The title becomes the goal of their life and they start to deviate from who they are and they transform into someone else. 

Some behaviors these people show are as following 

• They are identifying themselves with their job title
• They think talking a lot about their job is an important thing
• They stop listening to their team members
• In the team meetings they are the ones who always says the final word
• They believe that they know the best when it comes to their work
• They think that they deserve more respect because they have the “title”
• They believe that they have to mention their job title anytime and anywhere. Even their  jokes become about their job?
• They stop socializing with people who are at a “lower” position? (according to their “title standards”)
• They think that without them the organization will collapse and the are the ones who keep it running?  

If you are showing at least to 2 of the behavior above I have some bad news for you. Your job is capturing your character and your life.

If you are defining yourself with your job and with your title, who will you become after you lose that job or that title?

The antidote to this problem and the way to keep your identity is to be humble. Unfortunately, humility is seen as a weakness but on the contrary, it is a very string trait. In the article that was published in Forbes Jeff Hymen talks about the importance of humble leaders. He mentions that: “A number of research studies have concluded that humble leaders listen more effectively, inspire great teamwork and focus everyone (including themselves) on organizational goals better than leaders who don’t score high on humility.”

“Humble leaders understand that they are not the smartest person in every room. Nor do they need to be. They encourage people to speak up, respect differences of opinion and champion the best ideas, regardless of whether they originate from a top executive or a production-line employee.”

“When a leader works to harness input from everyone, it carries through the organization. As other executives and line managers emulate the leader’s approach, a culture of getting the best from every team and every individual takes root.”

In short, don’t let your job or job title define who you are, do listen your team members, build good relations with your colleagues and friends, do not brag about your job or title and most importantly; be humble, be down to earth. This is the way not only for having successful business results but also for having much better interpersonal relations. 

https://www.forbes.com/sites/jeffhyman/2018/10/31/humility/?sh=407df82c1c80

Do banks really need thousands of IT people?

 

On his article, “Should banks have more technologists than Microsoft?”, Chris Skinner talks about a bank having 40.000 technologist and he suggest at his article that: “… any bank that boasts tens of thousands of developers, technologists and engineers should first be asked the question: WHY? I don’t know why any bank today needs tens of thousands of developers, technologists and engineers. With APIs, Open Banking, cloud computing and more, a bank could probably run with just ten.”

https://thefinanser.com/2021/06/should-banks-have-more-technologists-than-microsoft.html/

The most important thing for the banks is to deliver best customer experience and for this, the banks need to invest a lot of effort and time to understand customers’ pain points and expectations.

After understanding the pain points and expectations the question comes: “How are we going to deliver the expected level of service and products?”

To answer this question many banks, turn back to their internal IT capabilities and start planning and implementing process accordingly. At the end of the day, often times, whatever is available through the legacy IT capabilities is delivered rather than the customer expectations. Therefore, best customer experience is not delivered.

The banks should look at the ever-improving fintech world and try to find a good solution provider for the delivery of the best customer experience. Rather than trying to develop the solution themselves banks should focus on cooperation with the fintechs. They should play the role of orchestrator instead of developer role.

With the APIs and cloud solutions, banks should be thinking about how they are going to provide seamless service and products for their customers by orchestrating different available services. The banks should worry about creating the API and security standards not developing the products and services on their legacy systems.

The “why do banks need thousands of technologists?” is a very valid question. For purposes of orchestration and deciding about the API and security standards, I am not sure whether 10 technologists would be enough but I know that banks definitely do not need 40.000 technologists.