Established fintech players lead financial institutions towards the banking of the future
Many can argue that the irruption of fintech players in the financial services ecosystem is forcing banks and traditional financial institutions to a tipping point where the latter either adapt or die.
Building partnerships with fintech firms, instead of seeing them as the enemy to take down, will allow banks to grow their revenue as they offer what the customer of today and tomorrow is looking for without needing to invest heavily in their own technology and logistics.
By partnering with well-established fintech companies, banks can expect a reliable, law-compliant, award-winning and visionary partner that takes care of all the technicalities, so that they can do what they do best to stay ahead of competitors: offer convenient, fast, secure and user-friendly banking and financial products and services.
In an environment where the much sought-after customer is more tech-savvy, educated, and demanding than ever, banks need to be quick to deliver an outstanding customer experience so they don´t lose market share to competitors in general, and new players in particular.
Those who set fintech companies as ‘the enemy’ for banks and financial institutions tend to present the former as unstable, non-compliant newcomers that are here to steal the business from their more established peers.
But despite habitually being seen as disruptors, challengers, or even enemies, the truth is that fintech companies can become a convenient and loyal ally for traditional financial institutions. In an ever more mobile-centric economy, solving the convenience/risk conundrum is becoming paramount for financial institutions and fintech firms alike. Being able to deliver convenient banking solutions for today’s savvy customer in a safe and secure mobile environment is arguably a big leap towards successful –and profitable – differentiation.
Digital identity verification enables banks to tap into high-revenue streams
Taking into account that financial technology is not only costly, but also requires a high degree of knowledge, time, resources and dedication, banks can definitely be better off by allowing fintech firms do all the innovation and disruption in this field so they don´t need to make that effort themselves. At the end of the day fintech companies have R&D at their core, so banks could use that knowledge to their benefit rather than trying to compete in a race, that, let’s face it, they lost long ago.
Recent market research reveals that around 25 percent fewer financial institutions will exist by 2020, as banks look to minimise the impact of increased competition due to the emerging new players. In such a competitive framework, how you differentiate and where you innovate become of capital importance.
For example, identity verification technology enables banks to get those prospects who cannot be approved by traditional means of identity validation out of their pended queue . These can be foreign workers, international students, or young professionals, who don´t have a solid credit record as yet but still make good future clients. In a similar vein, mobile identity authentication can help financial institutions grow their revenue as they simplify such traditionally costly and time-consuming processes as account opening, age verification and new card to digital wallet processing.
With mobile and online banking usage growing exponentially in the UK, the coveted millennials expect nothing but the newest technology from their banks so that they can carry on with their day-to-day banking needs when on the move.
Deepened engagement and loyalty as a result of outstanding customer experience
Deepening engagement and loyalty is only possible if you go the extra mile to keep your customers coming back. This is precisely why banks need to deliver banking solutions that go above and beyond the regular service to match their prospects’ lifestyle and banking needs.
A recent survey by Bank of America reveals that nearly two out of three (62 percent) respondents use mobile or online as their preferred method of banking, which is significantly up from 51 percent in 2015.
The majority of users check balances and statements (85 percent), transfer money between accounts (58 percent), and pay bills (52 percent) when accessing the bank’s app. Digital payments are also increasing in adoption with nearly 6 out of 10 consumers (57 percent) considering or already using a peer-to-peer money transfer service from their bank. Two in five (40 percent) respondents would also use, or already use, their phone to make purchases at checkout, which is up from 34 percent in 2015.
With such figures supporting the increased relevance of mobile, banks that are capable of allowing their future clients to open an account from their mobile device will instantly gain an edge over other industry players. Meeting Anti-Money Laundering Regulations, reducing operational costs and increasing customer satisfaction are other added benefits from the usage of mobile ID verification.
Image capture and electronic ID verification help banks join the branchless revolution
Digital identity verification allows traditional financial services providers to join the global shift towards fewer branches, so their businesses get more cost-efficient. In fact, and according to data gathered by Reuters, the number of branches operated by major UK banks has halved in the last 20 years.
As a sample of this trend, the likes of HSBC, RBS, and Barclays plan to shut down another 400 branches this year, with other international players such as Deutsche Bank planning to close 200 branches alone, while investing in mobile and online services.
With solutions that run on both desktop and mobile, financial services can ensure a smooth transition from bricks–and-mortar branches to virtual banking. Instant, secure, reliable identity proofing will give client acquisition a boost, helping to generate higher revenue and improving productivity.
So, should banks and fintech companies be friends or foes? As Henry Ford – for many the father of all disruptors – would say: “Coming together is a beginning; keeping together is progress; working together is success.”