Fintechs: Reinventing banking
The impact of fintechs – technology-based start-ups that are disrupting many areas of financial services – can be felt across the entire retail banking industry.
Accenture’s 2015 Future of Fintech and Banking report highlighted that investment in these companies grew by 201% globally in 2014, and this phenomenal rate of growth is showing no signs of slowing down. With a portion of the financial services market worth US$4.7 trillion at risk of being displaced by fintechs, according to Goldman Sachs, it’s understandable that many banks are feeling under threat. These threats are real and cannot be ignored.
Efma and Capgemini’s 2015 World Retail Banking Report found that, compared with traditional retail financial services organisations, many fintechs have a better feel for the customer experience and how to optimise it.
They are also capable of using their expertise in innovation to reinvent banking in brand new ways.
In addition, they are not burdened by the legacy systems or siloed businesses that tend to slow banks down. With all this in mind, the next steps taken by banks are crucial to their future success.
The approaches taken to date have been varied. Some are creating their own internal incubator programme, like Sberbank, or are partnering with an external accelerator/incubator. Others, like Santander, National Bank of Australia and Citigroup are investing in start-ups. And a few are going a step further by making outright purchases, one of the best recent examples being the BBVA acquisition of Simple in the United States. We’re yet to see which type of approach will prove the most fruitful, but industry experts are unanimous in their belief that those banks which bury their heads in the sand and fail to acknowledge the impact of fintechs are putting their entire business at risk.
In the following pages we bring together a wide range of insight, opinions and case studies to illustrate the full depth and breadth of the fintech challenge today. We question which types of fintechs are posing the biggest threats and we find out how pioneering banks are leading the way with effective solutions. We hope you find Fintech: reinventing banking a useful resource. Future releases in the series will be available exclusively for Efma members.
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