How banks should should react to the fintech revolution: Accenture Report
By Nora Hanafi for E27.com
Fintech is not necessarily a threat poised to hobble the banks, but rather can be leveraged to make old institutions more nimble and efficient
Traditionally, banks have internally overseen and controlled the entire processing operations.
These days, the banking landscape is currently sailing through turbulent waters thanks to the ongoing digital revolution, as evidenced by statistics from fiscal year 2014 which saw $12.21 billion worth of investments pumped into fintech ventures.
This heavy investment into the startup scene lea to the creation of a new breed of business-tech players (a.k.a. the fintech start-ups) able to provide more efficient platform services and potentially pose a threat to the status quo for banks.
But, according to a recent report from Accenture, big banks should view these fintech startups as enablers rather than competitors.
Titled, ‘The Future of Fintech and Banking: Digitally disrupted or reimagined?, Accenture encouraged banks to strategically integrate these fintech start-ups into their current frameworks.
As a result, banks will be in a better position to compete in the ever-evolving finance industry.
Banks that are still futilely providing platform services, instead of sourcing them from the better and more efficient providers, will struggle to compete in the long run.
As such, Accenture identified 3 key behaviours to help banks successfully seize the opportunities presented by this digital revolution.
- Be Open
Being open to innovations is the core of the digital revolution.
Banks should look into engaging with external technology innovators to help generate new solutions, knowledge capital and resources. Additionally, it means changing their organizational culture and identifying new areas for growth.
Traditionally, financial players collaborate with other financial services to share ‘non-core’ processes or services in order to reduce overall costs and/or create new market opportunities.
However, Accenture’s definition of collaboration sees the banks engaging and building ties with a bigger range of technical specialists and developers from other industries. This allows for a perspective shift as managers seek unique outlooks and ways to generate value in the finance industry.
By combining the assets from different industries, it not only create new and interesting products and services, it also adds to the future value generation.
In any start-up innovation model, venture investing is at the heart of success.
Innovative start-ups have a high innovation quotient but are in need of capital. On the other hand, established financial services, i.e. banks, have tons of capital but need to heighten their innovations. As such, Accenture sees the increasing interest to invest in fintech start-ups as an inevitable part of the future.
It is clear that should the bank stick to its traditional ways, the fintech revolution will shrink its role and relevance in the industry.
However, should the bank be open to innovating, collaborating with and investing in the fintech start-ups, the revolution can catalyse the bank to be in the best position to create a more efficient and cheaper financial services. These fintech start-ups can possibly aid the banks to become a much more essential and integrate part of our everyday lives.
Ultimately, the bottom line is clear – banks should embrace these startups in one way or another.
Read the full ‘The Future of Fintech and Banking: Digitally disrupted or reimagined?’ report.