Fintech and banks have an uneasy relationship. Fintech essentially threatens banks and while we’re not going to see banks fully disappear any time soon, there’s still the matter of how they can coexist peacefully if that’s even possible.
Some Traditional Banks Have Fallen Behind in Fintech
Let’s not forget at one time, banks were pretty much the only providers of fintech. While fintech, as we see it today, is a far more modern idea and well beyond the first technologies introduced by banks to provide financial services, fintech was still technically introduced by banks.
Banks also had a lot of fixed assets that made entering the space and competing difficult; the barriers to entry were high. Through technology, fintech startups emerged as the whole infrastructure is based on technology rather than branches and buildings, making entry much easier.
Technology is allowing startups to change financial services, but they’re not necessarily aiming for the banks, yet. They mainly focus on retail banking and very few are touching corporate banking. Most focus on a single product or service and empowering customers through technology, earning their trust, and keeping them with next-level customer service rather than entangling them in a web of financial products like banks have done in the past.
It’s More than Customers that Are Being Drawn into Fintech from Banks
While newer fintech firms are empowering customers through technology and drawing them away from some of the financial services traditionally offered by banks, they’re not the only ones seeing the allure of fintech.
While not a full-on brain drain, banking talent is moving towards fintech as well as it’s no longer seen as risky as it once was. Banks are no longer automatically the go-to for financial services and for those who want to be at the forefront, fintech is where it’s at.
Fintech is also seen as more exciting. Banks aren’t leaning into modern technology with the same fervour as fintech and people are looking to shake off the status quo at work and go to exciting startups where something’s happening all the time.
These shifts only fuel fintech and fintech innovation and it’s not only customers and the talent that are taking note, banks are finally starting to be drawn in as these threats and subsequent disruption is exactly what they’ve needed to stop dragging their feet.