Commercial banking has several hundred years of development history. Fintechs have been developing only since the end of the 20th century, but the development of some fintechs is many times faster than most banks currently operating. This is the main reason why banks are interested in the development of fintechs. In most countries, fintechs are not yet a significant direct competition for commercial banks, but taking into account their dynamic development in the field of new technologies, online settlements and payments, combining information services with financial or other services and e-commerce, with e-commerce , e-business, however, this may change in the future and this competition may increase significantly in the future.
Banks that are not afraid of competition from fintechs usually do not cooperate only by observing new technologies introduced to the online market of financial transactions by fintechs. However, commercial banks that are afraid of competition from fintechs are either interested in this type of cooperation in the field of technology development or take over these entities in capital transactions, including selected fintechs to capital groups managed by a given bank. There have been transactions of this type in which a commercial bank took control of a fintech, which was a dynamically developing startup or a thriving technology company operating in the new online media sector and new techniques for settlements and payments made electronically. Some banks, fearing competition from fintechs, observe their functioning and try to introduce into their business model solutions similar to those that develop fintechs with positive effects.
In view of the above, I am asking you the following question: Do banks cooperate with fintechs?
Please reply. I invite you to the discussion
banks definitely keep an eye on fintech, as part of strategic management
As Brian suggests, every bank will undoubtedly "keep an eye" on fintech. Deciding whether (and how) or not to cooperate with a fintech will depend on specific circumstances. The key question may be: Does the fintech have resources and/or capabilities that will benefit the bank?
I think the future will be about creating fintech deparments inside the banks. More banks will establish their own fintech deparments (institutions). There was a news on Bloomberg today about JP Morgan. They are hiring professionals from computer games industry to work for their fintech projects.
FT today profiles the Development Bank of Singapore and its CEO, Piyush Gupta. Gupta understood the threat and opportunity posed by fintechs much earlier than most of his industry counterparts. Significantly, has tried to get folks at DBS to think more like Jack Ma and Jeff Bezos than Jamie Dimon or John Flint. Consequently, DBS has been more proactive with fintech than any of his rivals. https://www.ft.com/content/00b7069c-d5ef-11e8-ab8e-6be0dcf18713
Banks need to work with Fintechs and Mobile Network Operators as all have completing competitive advantages. We see in Tanzania Commercial Bank of Africa working with Vodacom to offer Digital credit products...
Yes,if fintechs can add value and help market penetration and cost reduction.
In the context of the above considerations, the following question is also current:
Will banks become fintechs first or vice versa?
Will online banks become fintechs or vice versa, ie fintechs will become the leaders of online financial services?
Commercially and internet-operating banks currently in their public relations policies suggest that they are not afraid of competition from online-operating technology companies that offer certain products or services via the Internet, which they offer to their Internet users with their financial services, ie defined as fintechs. However, the same banks are not able to determine the limits of fintech development, which are currently in a strong development trend.
Therefore, they can not be sure of their position in the future in the area of online financial services. On the other hand, fintechs are trying to enrich, dispel existing online financial and pre-financial services. In addition, the pace of fintech development and the effective acquisition of innovative technologies by these entities may in the future lead to an increase in competitiveness with online-operating commercial banks.
In connection with the above, the following question is asked:
Will online banks become fintechs or vice versa, ie fintechs will become the leaders of online financial services?
Please, answer, comments.
I invite you to the discussion.
Best wishes
I beleive its not about banks cooperating FinTech as FinTech is important for banks long term survival otherwise legacy banks and their services may not be relevant 10-15 years from now!
Yes...Collaboration / SA are there...
Klus, M. F., Lohwasser, T. S., Holotiuk, F., & Moormann, J. (2019). Strategic alliances between banks and fintechs for digital innovation: Motives to collaborate and types of interaction. The Journal of Entrepreneurial Finance, 21(1), 1.
… types of collaborative business mod- els and show that the collaboration of companies …
Schmidt, J., Drews, P., & Schirmer, I. (2018). CHARTING THE EMERGING BUSINESS ECOSYSTEM OF FINTECHS AND BANKS: SEVEN TYPES OF COLLABORATIVE BUSINESS MODELS.
banks might want to secure a competitive advantage by collaborating …
Hornuf, L., Klus, M., Lohwasser, T., & Schwienbacher, A. (2018). How do banks interact with fintechs? Forms of alliances and their impact on bank value.
Collaboration not Competition: Banks Find New Partners …
Pucihar, A., Ravesteijn, M. K. B. P., Seitz, J., & Bons, R. (2018). Motives to form alliances for digital innovation: The case of banks and fintechs.
… The new ways of collaborating and organizing activities are conceptualized as platforms …
Persmoen, Å. K., & Sandvik, E. (2018). Collaboration between Banks and FinTech Companies: An Assessment of Emerging Organizational Designs within (Master's thesis, Handelshøyskolen BI).
… assessment of banks and fintechs reveals a striking match...
Drasch, B. J., Schweizer, A., & Urbach, N. (2018). Integrating the ‘Troublemakers’: A taxonomy for cooperation between banks and fintechs. Journal of Economics and Business, 100, 26-42.
… set of choices about the level to which banks decide to collaborate...
Omarini, A. E. (2018). Banks and fintechs: how to develop a digital open banking approach for the bank’s future.
Case of Indonesia...
Fermay, A. H., Santosa, B., Kertopati, A. Y., & Eprianto, I. M. (2018, June). The development of collaborative model between fintech and bank in Indonesia. In Proceedings of the 2nd International Conference on E-commerce, E-Business and E-Government (pp. 1-6).
Dear D A Gayan Nayanajith, Thank you very much for the bibliographic sources provided. I also encourage you to continue discussions on various topics on my profile.
Thank you very much, Regards, Have a nice day,
Dariusz Prokopowicz
Internet banks are enriching their electronic banking services with new advisory, assistance and information services and are becoming similar to fintechs.
Regards,
Dariusz Prokopowicz
Yes, banks need fintechs to advance technology in banking and finance. Bank staff will not have the capacity to introduce the latest financial technology, except in partnership with these fintech companies at principal level relationship either as a partner or shareholder.
In the initial years, Banks were ignorant of fintech startups, while fintech startups were innovating and disrupting banking and financial sector. Banks are now in catchup mode, have come up with banking apps, offerings similar to fintech's. However, in most of the cases, it is easy to use fintech app as compared to banking app. Banking app is more like a full banking app, where as a customer is wanting to complete transaction quickly, with less number of clicks. Payments and Transfers still is one of most popularly used fintech offerings.
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