“A recent trend of great interest to the business world is the convergence of activities between financial institutions and fintech companies (new technologies applied to financial activities). The coronavirus pandemic has brought health collapse, social desolation and loss of wealth, but at the same time it has brought out some values, such as unity of action, cooperation and mutual trust. A scenario where the different actors (banks) operate with a high degree of uncertainty, but with a high competitive level, facing the great challenges such as technological advances and the new needs of today’s consumers.”
This is one of the conclusions reached by the most recent technical report of the Latin American Federation of Banks – Felaban – on the recent trend of banking in terms of technology, payment systems, and financial inclusion.
The document obtained exclusively by Descifrado stated that digitalization and the use of servers to model business is a trend that is currently modifying the limits of the corporate sector and is forcing banks to seek new interactions with their clients, suppliers, and services offered.
“In this sense, banks have established strategies for purchasing fintech companies, alliances with them or the development of incubators, where these firms, generally in the initial stages of growth, develop specific solutions to the technological needs that the markets require and demand,” explained Felaban.
Read more about the collaboration between the fintech and the banking sectors in Latin America and find the latest economic news from around the world with the Born2Invest mobile app.
Several authors mention that fintech companies have been more agile in recent years to show innovation to the public, while banks are perceived as less innovative
According to some specialized authors, this has been happening due to the rapid incursion of Fintech companies in the world of finance, as they are generally smaller companies, with less associated regulation, and focus on specific consumer problems. Each large technological change has meant that banks have had to carry out profound organizational transformations, as shown by Merton (1995) when he mentions, as one of the examples, all that was necessary to make with the popularization of the automated teller machine (ATM).
Several authors mention that fintech companies have been more agile in recent years to show innovation to the public, while banks are perceived as less innovative. The latter seems to be explained by different phenomena ranging from regulatory burden, macroeconomic policy effects, to the relative size of firms versus competitors.
“(Fintech and bank collaborations occur in specific contexts of product solutions. At least, this is shown by data from 4 European countries over the last 5 years. Banks in turn develop a strategy in the digital channel, but they have to create organizational changes within themselves beforehand. An intermediate alternative between the speed required to implement changes and the market needs, would seem to be mediated by the number of new alliances between fintechs and banks”.
The working paper of the bankers’ guild in the region highlights that banks and businesses have accelerated their transformation processes with increasingly advanced technologies that provide simplicity of use and immediate availability.
A very important case is digital payments, which are rapidly gaining ground, reducing the gap between users and banks, facilitating access to new markets, building customer loyalty, and providing higher levels of security, portability, immediacy and control of consumption.
As a conclusion to its recent study, Felaban said that “financial consumers are looking for convergent solutions for their specific needs. Transacting, paying are everyday issues that everyone seeks to solve, for that reason the alliances between banks and fintech can be a successful way of joining synergies, which in the end provide alternatives to consumers and economic agents”.
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 Descifrado, 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.
PagaPhone Seeks to Facilitate Remittance Collection and Boost Financial Inclusion in Mexico
PagaPhone, which already has pre-authorization from the National Banking and Securities Commission to operate as an electronic payment fund institution,...
Rovi Shoots Up 72% its Profit in the First Half of 2021
The Spanish pharmaceutical company Rovi achieved a net profit of $60.3 million (€51 million) from January to June, compared to...
Four Million Round for the Italian Real Estate Crowdfunding Portal Walliance
The Italian real estate equity crowdfunding portal Walliance has closed a $4.73 million (€4 million) round. This is the third...
What Artificial Intelligence Means for Us Today?
Advantage of AI counts the smarter artificial intelligence which promises to replace human jobs, freeing people for other pursuits by...
Credit Suisse: Major Bank Admits Gold and Gold Mining Stocks are Undervalued
Precious metal investments like gold are often overlooked in exchange for more ‘exciting’ opportunities. As a result, they are frequently...
Crowdfunding7 days ago
Trusters’s Real Estate Crowdfunding Fund Raised €7.3 Million in Six Months
Crypto7 days ago
Elon Musk Said Tesla Will Accept Bitcoin Again
Featured7 days ago
How Rating Discrepancies Undermine ESG
Biotech7 days ago
UrbanFisio Launches Virtual Assistant to Surpass €1 Million by 2021