Fintech advances prompt lenders to become start up friendly
Lenders face challenges in finding the right firms and getting them integrated into their systems before their rivals as market dynamics change
Finding the right partners with which to work and fostering an environment for fintech collaboration are posing challenges for lenders, as the relationship between big global banks and emerging financial technology companies shifts away from competition to more of collaboration.
“Banks and fintech firms really are going to be symbiotic in the future, and so we need to develop a mindset in the bank which ensures our ecosystems are ones in which fintech companies can participate,” said Standard Chartered Bank’s global head, data and architecture for retail banking, Dipen Mehta.
“Of course this is a challenge, but it is one we have to work with,” said Mehta.
Many large global banks in their current form are not easily compatible with agile and innovative financial technology start ups, due to their complex existing systems and legacy issues. Some managers responsible for working with fintech companies at financial institutions, speaking privately, bewailed their more senior colleagues’ inability to make the necessary changes to the way in which they operate.
“After all the talk of disintermediating the banks, in some ways what we are trying to do is to reintermediate,” said Japan based start up Moneytree’s head of marketing, Zach Taub. Moneytree, a data aggregation application, currently works with two of Japan’s big three banks, and was in Hong Kong as part of its attempts to expand further in the region.
Fintech is moving fast, and any bank that does not see it as a threat is kidding themselves
“Most of the fintech companies are trying to sell their services to or partner with existing institutions,” said James Lloyd, fintech leader at EY. “But that does not mean that banks can forget the 5 per cent that are trying to compete with them,” he said.