Fintech and banks are not always the most comfortable partners, banks see banks as a digital threat to their business.

This has created a “fear” among banks that fintechs are willing to beat them at their own game, as they serve customers in a way that banks may not, and fintechs too. tend to be more agile when developing new technologies.

Consequence? Many banks choose to develop technology internally to solve the problems they face instead of partnering with a fintech as a preferred option. This approach supports the traditional view of banks that owning proprietary technology gives them an edge. But this is no longer the case.

Building in-house costs time and money

Building in-house technology is rarely a better solution. The necessary expertise needs to be recruited and then, after the product is created, it needs to be maintained and developed – a recurring expense that can cost the bank millions of pounds a year. five.

However, the potential for a symbiotic relationship between financial institutions and fintech is emerging. Banks are beginning to find that some of their decision-making processes are too cumbersome and could be simplified by partnering with a fintech company.

At the same time, many fintechs have realized that they need to clearly position their products and services as a “backer” to their older counterparts. In doing so, they become more attractive partners to traditional institutions that no longer see them as a threat. Instead, they are touted as a quick and efficient way to migrate legacy systems that will dramatically improve the customer experience.

Adoption is increasing

While there has been some resistance from banks to adopting fintech proposals in the past, this approach has begun to change – and largely in response to consumer demand. Plaid’s Fintech Effects 2021 report shows a whopping 86% of UK consumers use apps and services to manage their finances.

This means that while banks may have a more traditional business model that doesn’t rely on fintech involvement, their customers are increasingly accepting (and expecting) the service offering. online. This has created an “on-demand” environment that makes it more important to partner with more tech-savvy companies.

Along with the pace of digital adoption that has taken place over the past few years, financial institutions are increasingly turning to smaller, more agile fintechs that can deliver high-quality digital tools. help them modernize their services and meet customer expectations. This is especially true in industries that were previously slower to adopt technology, such as investment and wealth management.

Resistance remains, but why?

Despite the ability of technology to help banks improve operational efficiency, compliance and processing speed, digital projects often face resistance, especially from middle managers, who see this technology as a threat to their jobs.

It’s not entirely unreasonable. However, instead of seeing technology as a threat, they should realize how effective technology can free up their time to better serve customers and focus on revenue-generating activities.

Take a wealthy client who wants to expand their portfolio holdings. In fact, a technology-free approach can take up to six weeks to research opportunities in alternative assets, assess proposal feasibility, verify that the client has the right level of expertise, knowledge and wealth to benefit from it without breaking management processes, then execute the trades manually. Bankers and customers can read and distribute more than 100 pages of information to do this. Thanks to technology, the administrative and regulatory processes involved in this type of investment can be reduced from weeks to days, according to British fintech firm Delio. And instead of having to depend on emailing and scheduling meetings, clients can access this information, make decisions, and accelerate the investment process at their own pace. In an “on-demand” world, there is no doubt that the proposition is more appealing.

Why partnerships are the way forward

Partnering with an outside fintech with the expertise, drive and vision to digitize a specific element of the bank’s offering, continuously updated and improved, makes sense for most organizations.

The benefits for financial institutions and fintechs are clear. Once the bank and its employees get over the need to “own” the technology, they will see how useful such a partnership is and relatively inexpensive.

However, some education is required on both sides to ensure that any perceived threats from technology to bankers are remedied and for fintechs to appreciate and address any concerns. any concerns the bank and its employees may have.

However, once these issues are resolved, a thriving relationship that both parties can enjoy will make the customer journey clearer, cleaner, and faster, which in turn will improve banking services and build customer loyalty.