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Is 'symbiotic collaboration' key to the future of financial services?

Mar 12
 
Tags: Capgemini
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Is 'symbiotic collaboration' key to the future of financial...

"Symbiotic collaboration" between emerging financial technology (fintech) businesses and traditional financial services organisations will be one of the defining trends of the industry over the coming years.

That is one of the key findings in the World Fintech Report 2018 from Capgemini and LinkedIn, in collaboration with the European Financial Management Association (Efma).

The fintech sector has been growing in prominence within the global financial services industry, with small, agile businesses that make innovative use of technology creating competition for larger, well-established institutions.

Capgemini, LinkedIn and Efma explored how this trend is transforming the customer journey through enhanced consumer-centricity and the use of emerging technologies.

Fintech companies are focusing on strategies such as leveraging user data in order to deliver personalised services and offering fast, always-available online functions accessible from any device.

However, one of the key findings in the study was that, despite their strengths and advantages, many start-ups are aware they will find it difficult to achieve long-term success without forming partnerships.

Complementary characteristics mean there is potential for fintechs and traditional financial services firms to work together.

While many newer providers are making better use of technology, established banks and institutions tend to enjoy higher levels of consumer trust.

Penry Price, vice-president of global marketing solutions at LinkedIn, commented: "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."

Focusing on the defining characteristics of fintechs, the study revealed that more than 90 per cent of these firms see agility and the delivery of an enhanced customer experience as key competitive advantages.

More than three-quarters (76 per cent) said developing new products and improving existing offerings is critical to their success.

One of the big challenges these firms now face is scaling up and creating financially viable business models, according to Capgemini.

This is one of the key areas where fintechs could benefit from working with incumbent financial services organisations, whose key strengths include infrastructure, access to capital, risk management and regulatory expertise.

Anirban Bose, head of Capgemini's financial services global strategic business unit and member of the group executive board, said: "With more than 75 per cent 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.

"Without an agile and committed collaboration partner, both traditional and fintech firms risk failure."

Long-term success in partnerships between these types of organisations could depend on identifying the right collaborators and companies finding a way to work together.

Seven out of ten executives of fintech firms (70 per cent) said their biggest challenge when it comes to working with traditional financial institutions is the latter's lack of agility.

Larger businesses cited negative effects on customer trust, brand, and changing their internal culture as the main obstacles to new partnerships.

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