Do banks need to become fintechs in order to survive?
YES, says Lu Zurawski, consumer payments practice lead at ACI Worldwide.
Big banks definitely need to find ways to become more like fintechs, which represent a new way of engaging with customers who increasingly expect modern, mobile-first and always-available services.
These tech-savvy firms focus on customer-centric, informative apps which help with budgeting and saving decisions, as well as secure payments.
Unfortunately, big banks have to prioritise time and budgets on onerous tasks that maintain old and misbehaving IT systems, preventing them from competing effectively.
It’s an interesting paradox, though, that although some fintech companies have suffered availability problems (often due to IT outsourcing issues), customers and regulators have largely been willing to forgive because the benefits of the service outweigh issues caused by temporary outages.
Big banks can only compete once they reach this level of customer service. Becoming a fintech and modernising the ageing IT infrastructure is the only way for them to do this.
NO, says Todd Latham, chief marketing officer and head of product at Currencycloud.
The rise of challenger banks has piled pressure onto the established players, and it has asked a lot of questions about the way that traditional banks serve their customers.
Big banks can still remain relevant to a modern customer if they’re willing to work with fintechs, which can help them bring a broad range of services efficiently to their customers.
I talk to banks every day which struggle to find the capacity to create innovative services and a great user experience. This is not about a lack of willingness to change with the times, but because banks do a lot of things, and it is hard to do a lot of things well.
The trouble is that customers expect a broad range of services from their bank, and they trust them to provide them. By partnering with fintech firms, banks can provide the best of both worlds – services developed by specialists in a particular niche with the best technology.
That wouldn’t be possible if banks simply became fintechs.