What Banks Think About FinTech (and Vice Versa)
The Financial Brand recently reported on a new survey conducted by the Economic Intelligence Unit (EIU) which interviewed 100 senior bankers and 100 FinTech executives to get their thought on how financial technology companies might change the landscape. Among bankers the most popular response (with 33%) was that both banks and FinTech companies would dominate in different sectors. Nearly another quarter predicted banks and FinTechs would have about an equal share.
Only 20% stated that banks would continue to dominate. In the minority 10% felt that FinTech’s threat had been overhyped. On the other side of that coin, 5% feared that banks would become minor players in the future.
Oddly even some FinTech executives felt that the impact of the space had been overstated — even more than the bankers. Meanwhile 5% felt that banks would be the minority, which was equal to the opposing side. Finally 10% thought banks would have an equal share with FinTech firms.
As part of the survey EIU also asked banks and FinTech companies what they thought the strengths of their businesses were. For banks the top responses were their reputation for stability followed closely by their customer loyalty and existing customer base. FinTech respondents said their companies were able to focus on a limited set of products, lacked any legacy systems that hindered the big banks, and had agility and speed when getting to market.
Similarly both sides were questioned about their weaknesses. As you might expect many of the banks’ weaknesses were FinTech’s strengths and vice versa. For example, FinTech execs said they needed to build their customer base — something that the big banks already have. However, the FinTech companies had the ability to innovate and bring new ideas to market while that remains a sore spot for many banks.
This EIU study highlights why many banks and financial technology companies are now looking to work together — something Renaud Laplanche, CEO of marketplace lender Lending Club, has spoken on in the past. That being said, the question remains how much FinTech companies can integrate into big banks without, in turn, inheriting some of their problems. Still it seems all but inevitable that we’ll see more partnerships between rivals forming in the coming years.