Fintech – Friend or foe? Maybe both.
If your bank is not following the developments in the fintech space, it should be. There is a lot going on and some of it (most of it?) is designed to compete for your business. In fact, it may have already taken some business, without your bank even being aware. For sure, fintech is in your future as a competitor and as part of your overall service and offerings.
First of all, what is fintech? I’m going to make a distinction between fintech and financial technology, although in reality they are the same. Financial technology is one of your bank’s largest expenditures and the infrastructure by which you service your customers using traditional application accounting systems that post transactions and provide balance reporting through a variety of delivery channels.
Financial technology is buttoned-down and rather mature, certainly middle-aged by now. Fintech, on the other hand, is a wild child, full of promise, but needing discipline (maybe regulation?) and potentially quite disruptive. Fintech is ever evolving, it’s exploding actually. It has attracted massive investment from venture capitalists, $5.7 billion worldwide as of Q1 2016!
It is impacting not only the banking industry, but insurance and wealth management. It has the potential to reshape these industries through fully-digitized services, eliminating friction, lubricating processes, and therefore, reducing the cost of services. This still doesn’t describe what fintech is! In future blogs, I will provide examples of fintech and suggest steps that your financial institution can take to meet the challenges ahead.
Fintech entered the mainstream on May 1, 2016. CBS Correspondent Lesley Stahl reported on “Fintech: Shaking Up the Financial Industry” on 60 Minutes. You can’t get much more mainstream than that.
Articles on fintech appear in American Banker with increasing regularity. If you do an internet search on fintech, you will find that there is no shortage of information on the subject. If your bank isn’t following fintech closely, I recommend that it start, in fact, each department should be following fintech. Below are links to resources that I recommend to provide a broad view of activity in this space.
In the blogs ahead, I will drill down to offer a few examples of fintech as it exists today. I will describe a few actions your bank can take to stay ahead of any fintech threats.