FinTech companies are likely to fail if they do not build an effective partnership ecosystem according to World FinTech Report 2018 from Capgemini and LinkedIn, in collaboration with Efma.
Competition and customer demands for convenience and personalization are transforming financial services—and creating new opportunities for FinTechs to collaborate with traditional financial firms. With complementary strengths, FinTechs are increasingly looking to symbiotic collaboration with the traditional financial services firms they once sought to overthrow
FinTechs, innovating with emerging technologies, are revitalizing the customer journey through financial services. Competition and rising customer expectations are driving demands for more convenience and personalization. FinTech firms are leveraging both customer data to drive personalized offerings, and providing fast, 24/7 online services that can be accessed from any device.
However, financial services customers have greater trust in the brands of traditional firms versus those of FinTechs, according to the World FinTech Report 2018. For future success, financial services firms must look to continue aligning with customer goals, maintaining trust, and delivering digital, agile, and efficient processes.
“FinTech firms are finding success with a customer-centric focus that fills in gaps left by traditional firms. These gaps opened the doors to FinTechs, but trust in traditional firms remains important to customers,” said Penry Price, Vice President, Global Marketing Solutions, LinkedIn.
In fact, the World FinTech Report 2018 reports found that more than 90 percent of FinTech firms said agility and providing an enhanced customer experience are key to competitive advantages, and more than 76 percent cited their ability to develop new products and improve existing products and services as critical to success.
At the same time, traditional financial institutions are adopting many FinTech customer service enhancements, while retaining strengths including risk management, infrastructure, regulatory expertise, customer trust, access to capital, and more. Both traditional and FinTech firms stand to gain from a symbiotic, collaborative relationship.
“With more than 75 percent of FinTech firms identifying their primary business objective as collaborating with traditional firms, it is essential that both FinTechs and traditional firms transform their business models by collaborating to drive innovation while retaining customer trust,” said Anirban Bose, Head of Capgemini’s Financial Services Global Strategic Business Unit and Member of the Group Executive Board.
According to the World FinTech Report 2018, more than 70 percent of FinTech executives said their top challenges to collaborating with traditional financial firms was their lack of agility, while traditional firms perceive negative impacts on customer trust, brand, and changing the internal culture as their top challenges.
“For a successful collaboration, both sets of firms will need to remain open-minded and keep a dedicated focus on collaboration. Financial institutions need to respect the FinTechs’ culture to avoid losing their agility, which is one of the major assets that they bring to projects. The next challenge will be to select the best fit FinTech with whom to collaborate,” said Vincent Bastid, Secretary General, Efma.