Banks that collaborate, embrace Open X and transform into Inventive Banks are most likely to prosper
Capgemini and Efma published the World FinTech Report 2020 revealing that despite a widening gulf between traditional banks on one side and BigTechs and challenger banks on the other, traditional banks have an opportunity to thrive in today’s market by embracing Open X1 and becoming Inventive Banks.
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“In order to keep up with ever-changing customer expectations in today’s marketplace, incumbent banks must transform into Inventive Banks with collaborative support from qualified FinTech partners.”
The gap between what customers expect and what traditional banks currently deliver has never been wider, but now is the right time for banks to catch up from front to back-end to offer the best customer experience. With data-fueled, hyper-personalized experiences in real-time, BigTechs and challenger banks have demonstrated their ability to win customers over. In contrast, while traditional banks have invested heavily in front-end IT infrastructure to improve customer experience, efforts so far have not measured up to what has become customary across other sectors, especially with tech providers. For banks to remain appealing and competitive in this shifting landscape, the report highlights that they must transform into agile and customer-centric Inventive Banks by embracing Open X as well as take on a specialized role, rather than a universal one, such as supplier or aggregator within the new open ecosystem.
The way forward: effective structured collaboration is essential for bank and FinTech partnerships to be successful
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Both Banks and FinTechs are currently frustrated by the lackluster results of their collaborations to date. The World FinTech Report 2020 revealed several pain-points:
- Only 21% of banks say their systems are agile enough for collaboration
- Only 6% of banks have achieved the desired ROI from collaboration
- 70% of FinTechs don’t culturally or organizationally see eye-to-eye with their bank partner
- More than 70% of FinTechs say they are frustrated with the incumbent’s process barriers
- Half of FinTech executives say they have not found the right collaborative partner
“The world has changed dramatically over the last couple of months. Businesses will evolve and emerge from the COVID-19 crisis in different and profound ways. For traditional banks, this will translate into an even greater need for digital experience through further collaboration with FinTechs. Since we began this report three years ago, FinTechs have moved from disruptors to mature players, and it is now essential for incumbent banks to consider them not only as formidable competitors, but as necessary partners of choice to meet changing consumer expectations,” comments Anirban Bose, CEO of Capgemini’s Financial Services and Member of the Group Executive Board. “Effective collaboration requires people, business, and process maturity. While, for traditional banks, failure is not an option, FinTechs are fast to market yet ready to fail. Inventive banks with the willingness and capabilities to collaborate at scale and industrialize innovation are most likely to prosper within the shared Open X ecosystem.”
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