We had a skim through the latest press release from Cap Gemini, which summarises an in-depth report on global FinTech and the challenges for smaller, innovative players. The conclusion seems to be that customer trust in established brands places a serious obstacle in the path for new companies in the sector, and so the solution is partnership.
FinTechs, innovating with emerging technologies, are revitalizing the customer journey through financial services. Competition and rising customer expectations are driving demands for more convenience and personalization.
However, financial services customers have greater trust in the brands of traditional firms versus those of FinTechs, according to the World FinTech Report 2018. For future success, financial services firms must look to continue aligning with customer goals, maintaining trust, and delivering digital, agile, and efficient processes.
“FinTech firms are finding success with a customer-centric focus that fills in gaps left by traditional firms. These gaps opened the doors to FinTechs, but trust in traditional firms remains important to customers,” said Penry Price, Vice President, Global Marketing Solutions, LinkedIn.
Win-win collaboration opportunity
The World FinTech Report 2018 found that more than 90 percent of FinTech firms said agility and providing an enhanced customer experience are key to competitive advantages, and more than 76 percent cited their ability to develop new products and improve existing products and services as critical to success. The challenge is to scale-up and create financially-viable business models. Although FinTechs have raised nearly US$110 billion since 2009, the report found that most are likely to fail if they do not build an effective partnership ecosystem.
At the same time, traditional financial institutions are adopting many FinTech customer service enhancements, while retaining strengths including risk management, infrastructure, regulatory expertise, customer trust, access to capital, and more. Both traditional and FinTech firms stand to gain from a symbiotic, collaborative relationship.
“With more than 75 percent of FinTech firms identifying their primary business objective as collaborating with traditional firms, it is essential that both FinTechs and traditional firms transform their business models by collaborating to drive innovation while retaining customer trust,” said Anirban Bose, Head of Capgemini’s Financial Services Global Strategic Business Unit and Member of the Group Executive Board. “Without an agile and committed collaboration partner, both traditional and FinTech firms risk failure.”
Finding the right partner is essential to successful collaboration
A successful collaboration is contingent on finding the best partner and engagement model. To develop strong partnerships, firms will have to overcome barriers to collaboration.
According to the World FinTech Report 2018, more than 70 percent of FinTech executives said their top challenges to collaborating with traditional financial firms was their lack of agility, while traditional firms perceive negative impacts on customer trust, brand, and changing the internal culture as their top challenges.
“For a successful collaboration, both sets of firms will need to remain open-minded and keep a dedicated focus on collaboration. The next challenge will be to select the best fit FinTech with whom to collaborate,” said Vincent Bastid, Secretary General at Efma.
Looking ahead: accelerating collaboration and preparing for the future
The future of financial services is in the hands of both the FinTech and traditional firms that can complement each other’s strengths to meet customer needs and redefine the journey. To help financial services firms accelerate collaboration and foster symbiotic relationships, Capgemini launched a ScaleUp Certification tool. This tool creates a model for collaboration and mutual verification that encourages partnership between traditional firms and FinTechs. What is clear is that now is the time for FinTechs and traditional firms to find the right collaboration partner and redefine the path to success.