While banks held sway as the dominant power in finance for decades, the rise of FinTechs is creating a new challenge for banks in maintaining the number one spot.
In a recent post by Currencycloud, the cross-border payments firm looked in greater detail at how instead of being diametrically opposed, banks can benefit from the rise of FinTechs to improve their offering.
According to the firm, banks have the capital, resources, and expertise to turn the tables on new entrants and launch digital offerings of their own. However, the challenge is that many of them do not have the time.
Currencycloud said that an accelerated disruption strategy could include tapping into multiple specialist FinTech ecosystem providers that collaborate to provide niche tech and digital capabilities, or operating models required to grow and build new solutions.
The company added, “Banks building a new digital business or offshoot is increasingly seen as an effective way to grow. Decoupled from the risk adversity and legacy tech stack of an incumbent, and benefiting from the agility of a startup, the new business should be able to pursue growth opportunities faster than its parent.”
There has already been notable examples of this, including low-cost cross-border payments and multi-currency wallets. Digital-asset or crypto exchange or WealthTech platforms are also an example, as well as vertical offerings in healthcare, housing, mobility, or ecommerce with seamless payments enablement and embedded lending.
Currencycloud also gave the example of an ecosystem serving SMEs with a bank account linked to services such as one-stop accounting, invoicing and bill payments and co-branded or white-label point-of-sale or BNPL offerings.
The business concluded, “Fintechs themselves understand the need to partner with other agile best-in-breed innovators. Just like tugboats, the niche expertise of fintechs, can form partnerships for business building – delivered to market quickly and delighting customers with great user experiences – so banks can be empowered to sail on, full speed ahead.”
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