From competitors to collaborators: this is how Finances Online Review predicts the future of a relationship between financial institutions and FinTechs. The need for this collaboration is coming from both sides: for FinTechs, it is an opportunity to gain more consumer trust, while for banks and financial institutions gain through the implementation of technological innovations into their services.
It’s a win-win situation. Banks will be able to scale up their operations with a more data-driven approach, which will be less costly and more efficient through the use of FinTech solutions. Banks will gain more technical know-how and the ability to focus on more valuable tasks from this collaboration. For FinTechs, partnering with banks and financial institutions is helpful to gain access to more funding and stable growth. By having support from an established institution, FinTechs have more chances on becoming bigger and more sustainable businesses.
What are the options of collaboration between FinTechs and financial institutions?
Strategic collaboration
According to the PwC report, financial institutions are no longer interested in investing in fintech just to appear innovative. They want clear strategic benefits from the collaboration. Through strategic alliances, financial institutions can gain access to more clients. Additionally, as FinTechs have “no borders”, a strategic alliance with those could help financial institutions to expand internationally.
Technology implementation
For banks and financial institutions, of course, one of the main benefits of collaboration with FinTechs still remains the potential to improve own services and products. FinTechs have bigger technical development power, which financial institutions recognize. There are a lot of possibilities for financial institutions to implement the technology into their operations: acquisitions, incubation, and partnerships. However, the fastest and easiest way to (cost-) effectively implement the technology is by addressing white label FinTech platforms. For example, platforms like Crassula have a ready-made solution for digital onboarding, virtual IBANs, SEPA & SWIFT transfers and FX that banks can implement. What could be more appealing about addressing white label platforms is that financial institutions would be able to present the digital solution fully branded to themselves.
Challenges and solutions for successful collaboration
Different perspectives for the future: because of different company journeys and therefore inner culture, the challenge of collaboration between financial institutions and FinTechs could be in their lookouts for the future. Banks are usually more revenue-driven, while FinTechs are looking beyond financial gains. Solution: both sides should give each other freedom in their own operations and entrepreneurship.
Flawed strategy: the sides should approach the collaboration as a partnership between companies from different industries but with the same goal. If either side could not understand that there are underlying differences between traditional banks and FinTechs, despite, working for a similar purpose, there might be serious flaws in strategies and business plans, diminishing one side’s goals. Solution: in order to avoid the strategic clash, financial institutions can address white-label FinTech platforms, which will allow them to integrate a technical solution without changing their strategy.
There are many opportunities for collaboration between FinTechs and financial institutions, including strategic partnerships, investments, acquisitions, and technical solution implementation. The success of such is defined by the analysis of benefits and risks for both parties. However, the easiest and most sufficient solution here seems to be addressing white label platforms, which do not require any change in strategy or time-consuming legal decisions.
Want to learn more about white label FinTech platforms? Visit crassula.io
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