The demand for digital banking services has skyrocketed, especially during the pandemic. It is quite interesting to see the sweeping technology-led changes in the banking industry. The traditional banking sector feels the need to adapt and innovate to stay in tune with new technology. Instead of considering fintech companies as competitors, most traditional banks are now changing their model and collaborating with them.
Does a collaborative approach help banks meet the rising demands of their tech-friendly customers? Do such collaborations bring more value to the future of the banking sector?
Let us understand how a collaborative approach can redefine the future of the banking industry.
1. Reduction in the technological gap
Building technological solutions can be costly, time-consuming, and hard. Fintech companies are more up-to-date technologically and offer efficient next-gen solutions. Banks can leverage this by successfully collaborating with fintech institutions to reduce the technology gap faster and at lower costs.
2. Better engagement with customers
Customer expectations are rising in terms of technological solutions and experiences. Fintechs can be valuable partners, helping banks build engagement with their customers. While many customers still visit physical banks, there is a rising number that prefers remote interactions using online technologies and solutions. These partnerships make it possible for banks to provide services to effectively engage with their customers.
3. Complying with regulatory requirements
Banks need not bear additional expenses to ensure compliance with laws and regulations. In the partnership with a fintech company, all compliance and regulation requirements are attended to by the company. This means lower costs borne by the banks and hence promotes efficiency.
4. Cross-selling of the fintech’s products
The partnership can help banks widen their product range and cross-sell a range of products and services. They can partner with a fintech company and test their new offerings. This is a more flexible approach and allows the banks to attract more customers with a competitive pricing strategy. The fintech in the partnership is able to access the bank’s large and established customer base to market their solutions.
Banks can take advantage of the potential offered by new technology
Collaborating with fintech service providers gives banks the opportunity to ride the wave of new technology. The partnership is an opportunity for banks to quickly scale up and improve their service offering. It helps banks build their visibility and offer the benefit of innovation to their customers. Hence, a bank and fintech collaboration can be symbiotic, and need not be competitive.