Felaban assures that banks and fintech companies are working closely together
For the Latin American banking federation (Felaban), which groups together the financial entities of the region, digitization and the use of servers are important to model banks, which seek new interactions with their clients, suppliers and services. 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.
“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.
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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”.
(Featured image by Lteixera via Pixabay)
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First published in Descifrado, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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