Traditional banks and fintech companies are still struggling to create good conditions for collaboration, according to Capgemini and Efma in the “World Fintech Report 2020” published on April 21st.
Discover more about the collaboration between banks and fintech companies with the Born2Invest mobile application. Our companion app is a fast and easy way to check the latest business headlines. It gives users access to recent publications and stories, media and objective analysis, thematic sections, and feeds.
Few banks and fintech companies are satisfied with their collaboration
With the COVID-19 crisis, “consumers have discovered the digital channel. On the one hand, the bank sector needs to improve its customer experience but does not have the means to do so. And on the other hand, the fintech sector has no financing. A collaboration between the two players is, therefore, necessary,” explained Elias Ghanem, head of market intelligence for the financial services sector at Capgemini.
At the moment, few banks and fintech companies seem to be satisfied with their collaboration. For example, according to the report, 21% of banks said their systems are agile enough to collaborate. Furthermore, only 6% of banks have achieved a desired return on investment through collaboration with fintech companies.
On the fintech side, 70% do not share the cultural or organizational values of their partner bank. In addition, half of the fintech companies’ bosses said they have not found the right partner.
Banks lack innovation in their processes
Capgemini assessed the level of maturity of the banks on the four pillars of collaboration: people, technology, business, and finance. The company also evaluated the bankers according to four moments of collaboration: meeting, evaluation, acculturation, and industrialization. The results showed that out of the 60 banks analyzed, only three are able to create good conditions for collaboration.
In the all-digital age, Big Tech and neobanks have demonstrated their ability to lure customers by offering innovative experiences. Yet, despite traditional banks’ investment in IT infrastructure to improve the customer experience, they are still struggling to innovate.
Banks should, for example, improve the middle and back office, the expert believes. “In banks, there are still manual processes: for example, currently very few banks offer a digital contract, unlike neobanks. As far as the back-office is concerned, banks do not use customer data to better support them,” explained Elias Ghanem. On a global level, investment in IT increased by 4% between 2016 and 2019. On the other hand, the share of new investment in IT rose from 24% to 33%, mainly in the front office.
Faced with this observation, “the banks must act now with the start-ups: it has been three years since they are only on the experimental part: however, the final consumer does not benefit from it,” observed the expert.
According to the report, 50% of users consider that they do not have a personalized relationship with their bank and 60% cannot make payments by direct debit on several merchant sites. Similarly, 48% of Generation Y customers consider that traditional banking does not offer enough services, pushing them to sign up for neobanks.
The COVID-19 crisis will probably speed up collaboration between traditional banks and fintech companies, enabling traditional banks to become “inventive” banks.
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in L’AGEFI, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.
Before investing in crowdfunding, be aware of the structure surrounding the platforms
Although the crowdfunding ecosystem is diverse and opens the door for those who want to start investing, it also requires...
Legalization trend drives cannabis ETFs to significantly grow
More and more US states are legalizing the use of cannabis. The trend around the plant is not only boosting...
VB Devices closes a €1.1 million round to consolidate its market entry
The operation of the Spanish startup VB Devices has raised more than $488,000 (€400,000) between new investors and current partners...
ESMA now wants to regulate ESG rating agencies
ESMA focuses on two “pain points” with regard to ESG ratings. On the one hand, it calls for minimum regulatory...
Bitcoin whale alert: major investors dump large amounts of BTC
Bitcoin whales have sold off larger amounts of Bitcoin (BTC) this month, according to the latest data from aggregator Glassnode....
Business6 days ago
One eye on the future, another on the past— LODE is solving the gold and silver liquidity problem
Featured6 days ago
Amundi will pay managers based on ESG returns
Business6 days ago
The markets continued their relentless climb with new all-time highs once again
Crowdfunding5 days ago
How can private banking support the crowdfunding sector