Banks take on fintech partners

ADAPTING: CLIENTS WANT BEST MODERNISATION

Fintech firms think about customers differently

The last few years has seen much activity in fintech: many companies have used the opportunity to change the way financial services are delivered.

Most people want their banks to be a bit boring, with order and propriety. Increasingly, however, customers also want an experience making best use of modern technologies.

These two requirements aren’t an easy fit; many banks find it challenging to adapt. “A lot of the banks think that having a fintech or digital strategy means producing a mobile app…. What is truly disruptive are things like bitcoin and the blockchain – businesses that never previously existed,” says Paige Robertson, AlphaCode head of marketing and operations.

Innovation

RMI Holdings senior investment executive Dominique Collett says there are two fintech business camps: those that work within banks and insurers to help improve certain processes, and those trying to disrupt them. Both have enormous room for innovation.

“Fintech firms think about the customer very differently. They have incredibly strong design and user experience capabilities.

“They understand how to engage a customer, get them on board much quicker, talk to them much better, and make it cheaper and easier to transact. And because they are fast, develop very quickly, and really understand digital design, they deliver a great customer experience.

“Banks struggle to compete because they are big, slow cumbersome machines.”

To meet this challenge, a number of banks are partnering with, or absorbing, fintech companies. “This way you get the benefit of bringing the existing customer base and data that the banks sit on and combining it with the design and technologies that sit with the fintech company,” says Collett, adding that this match made in heaven is difficult, as the two types of business are culturally different.

A South African example where it has worked is Standard Bank’s SnapScan acquisition. Recognising the fintech business was successful due to how it operated, Standard Bank gave SnapScan room to continue running as an entrepreneurial start-up in its own offices, with its own culture, therefore allowing it to continue its momentum.

Pu ing the customer in charge

Banks must accept that in the digital era, customers must be allowed more influence. “One of the greatest things about the fintech boom is the way that technology drives efficiency and transparency,” says Collett. “Banks have always come under fire for the fact that their pricing and processes aren’t transparent, and fintech is allowing a lot of that mystery to be removed.”

For example, My Treasury demystifies bank deposit rates by allowing South Africans to compare hundreds of products through one website. They can identify the most attractive rates and most suitable product.

“We are moving to a stage where many people don’t want to walk into a branch. They don’t even want to talk to people. They want to be able to deal with their bank when they want to,” says Robertson.

In the next 12 months, SA’s expecting two new banks – Discovery Bank and the Commonwealth Bank of Australia – both providing completely digital offerings, with no branches.