Traditional banks can be the ‘trusted face’ of fintech and online finance firms
While banks see fintech as their biggest threat, they can use their trusted position among customers and regulators to collaborate in the shift to digital banking, software firm Temenos says
Traditional banks see online payment and financial services providers as their biggest threat, but they can still be a part of the shift to digital banking because of their status as regulated institutions that have the trust of customers and authorities, according to banking software provider Temenos.
In a recent survey of 400 banking executives, Temenos said more than 53 per cent of respondents cited e-financial services like PayPal, Alipay, WeChat Pay and Apple Pay as their biggest non-traditional competition in the next two years.
But their relationships could be complementary and not necessarily purely competitive, Temenos said.
“The more organisations like Alipay move into traditional banking such as deposit-taking and lending, the more they will attract the attention of the regulator, as is beginning to happen,” said Lee Volante, director of the business solutions group for the Asia-Pacific at Temenos.
“We believe organisations like Alipay may well become the face of retail banking, but they will rely on banking organisations to do the heavy lifting as regulated institutions,” he said.
“Traditional banks have spent many years building customer bases who trust them to safeguard their money and provide 24-7, year-round real-time services. Fintech firms, often small start-up organisations, still have to prove themselves to earn the trust of customers,” he said.
In the US, e-commerce giant Amazon’s growing financial services business is increasingly attracting the attention of regulators, according to a recent Bloomberg report, while consultancy Bain & Co has predicted that Amazon could rival the nation’s big banks in as little as five years.