The rise of FinTechs continues to reinvent the customer experience of consuming financial services. However, many startups have realized that they are unlikely to succeed on their own. FinTechs are continually looking to forge complementary partnerships with traditional financial services firms, although in the past they have tried to outclass them. This is what emerges from the report called World FinTech Report 2018 conducted by Capgemini and LinkedIn, in collaboration with Efma. The research studies how FinTechs are changing the experience of their customers in the financial services sector through a greater centrality of the same and the use of new technologies, the potential of symbiotic relationships between FinTechs and traditional financial institutions and finally the important role played by BigTechs.
FinTechs are the engine that drives the customer
FinTechs, thanks to the innovations they develop with the use of emerging technologies, are reinventing the experience of users of financial services. Competition and rising customer expectations are resulting in an increased demand for more convenient and personalized services. FinTechs are using customer data to develop personalized offers and to provide fast, 24/24 online services that can be accessed through any device.
However, the World FinTech Report 2018 states that users of financial services place much more trust in the brands of traditional companies than FinTechs. To be successful in the future, companies in the sector must continue to align their goals with those of their customers, maintaining a high level of trust and offering them digital, efficient and vision-oriented processes. agile.
«FinTechs manage to be successful companies thanks to a focus based on the centrality of the customer which allows them to bridge the gaps created by traditional ones which, consequently, have given FinTechs the opportunity to enter the market, despite the trust in traditional companies still remain a central factor for customers»Said Penry Price, Vice President, Global Marketing Solutions di LinkedIn.
Partnership Opportunities win-win
Freed from outdated systems and an old-school culture, FinTechs have used new technologies to respond quickly to customer needs. Indeed, the World FinTech Report 2018 highlighted that over 90% of FinTechs believe that agility and the provision of better customer experience are key elements in obtaining a competitive advantage, while over 76% say that their ability to develop new products and services and improve existing ones is a fundamental element of their success. The challenge therefore is to scale up and create business models that are financially viable. Although FinTechs have reached $110 billion in revenues since 2009, Capgemini's study underlined that most of them are very likely to fail if they fail to build an efficient partnership ecosystem.
Similarly, traditional financial institutions are adopting many FinTech measures to improve customer service, while retaining some strengths such as risk management, infrastructure, regulatory expertise, customer trust, access to capital, and so on. In fact, both traditional companies and FinTechs can benefit from a collaborative and symbiotic relationship.
«With over 75% of FinTechs considering collaboration with traditional companies as their primary objective, it becomes essential that both FinTechs and traditional companies transform their business model, through mutual collaboration that allows to increase innovation, maintaining at the same time the trust of customers», said Monica Ferrari, Head of Banking di Capgemini Italy. "Without an agile and collaborative partner, both traditional companies and FinTechs risk failure."
Finding the right partner is essential for a successful collaboration
This year's report highlighted that collaboration is an essential element for both FinTechs and traditional financial firms to achieve long-term success. A successful collaboration is essentially based on finding the best partner and the best engagement model. To develop strong partnerships, companies must overcome barriers to collaboration.
Three considerations emerge from the World FinTech Report 2018. First: Over 70% of FinTech executives say the biggest challenge of working with traditional finance firms is their lack of culture agile. Second: Traditional businesses are experiencing negative impacts on customer trust and brands. Third: the change in corporate culture represents a major challenge for both types of companies.
«To achieve a successful collaboration, both categories of companies must be open-minded, maintaining a constant focus on collaboration. Financial institutions must respect the FinTech culture to avoid losing their agile characteristic, which represents one of the fundamental assets of their corporate nature. The next challenge will be to identify the best FinTech to collaborate with». said Vincent Bastid, Secretary General di Ephma.
Looking ahead: accelerating collaboration and preparing for the future
The future of financial services is in the hands of FinTechs and traditional companies, which can complement each other to meet customer needs and redefine the customer experience. To help financial services firms accelerate collaboration and foster symbiotic relationships, Capgemini has launched the tool ScaleUp Certification. This tool develops a collaboration and mutual verification model that encourages partnerships between traditional companies and FinTechs. The biggest unknown is represented by the disruption coming from BigTechs – large multinational technology companies with huge retail customer bases – but it is clear that the time has come for FinTechs and traditional companies to find the right partners to collaborate and redefine their path to success.
BigTech is a term used to refer to technology companies whose operations are based on data, usually not present in the financial services market. Some examples: Google, Amazon, Alibaba, Apple and Facebook.
The World FinTech Report 2018
Capgemini and LinkedIn, in collaboration with Efma, developed the World FinTech Report 2018 based on a global survey involving traditional financial services companies and FinTechs, including companies that offer banking and lending services, payments and wire transfers , asset management and insurance. They were asked questions aimed at grasping the perspectives of both FinTechs and traditional financial services companies, exploring various aspects of the customer experience and key success factors for its improvement. The survey highlighted the importance of developing relationships between incumbent and new players, with a focus on the FinTech perspective, as well as an analysis that could support both types of companies in achieving their business goals.
