Collaboration, Not Competition, Will Move FinTech Forward

We recently wrote about the talent shortage in FinTech, and what it means for the future of banking and financial systems. With that in mind, it should be no surprise that, without any talent to fight over, players in the FinTech space need to collaborate.

Otherwise, FinTech development could be negatively impacted by a lack of knowledge sharing.

The Numbers

In a study that London-based Big Four accounting firm PwC recently conducted, 82% of surveyed banks, insurers, and asset managers plan to forge new partnerships with FinTech companies within the next three to five years.

But it’s not all rainbows and unicorns. Although finance can sometimes be all about the numbers, it’s important to be cognizant of what other qualities each party brings to the table in a potential partnership.

Yin and Yang

Every organization has its own unique set of challenges. It’s how it handles these challenges that determines what the company and its future become. Does your potential partner have a challenge that you can help with? When both parties can mutually benefit from each others’ knowledge, it benefits their customers too.

A big business strategy for banks to grab onto is uncoupling of product groups into single services. While banks can technically “do it all” in-house, people’s preferences are trending towards using specialized, niche services for each small banking product. It’s easier to acquire customers with this strategy, and it’s also easier to keep them happy.

Another aspect to consider is the fit between company cultures. If you’re looking to pair up with a startup, you might be surprised at how they expect their employees to dress, especially compared to your company’s rules. People will inevitably be the bread-and-butter of partnerships, so if the match isn’t made early, it could waste a lot of time and money. Both sides must be flexible and open to evolving into something greater than the sum of its parts for the sake of the partnership.

Keeping Up

There’s no doubt that big banks have felt the disruptive impact of FinTech startups, especially in recent years. But they have something very valuable that could pull them out and over FinTech startups: years and years of multifaceted data.

Banks have location data, customer interaction data, and financial health metrics on each customer. Combine these numbers with the latest in artificial intelligence (AI), virtual reality, and biometric data, and banks can solve many problems that their customers face. New interactive dashboards, automated customer service, and advanced analytics could give each customer a unique experience that’s tailored to their financial goals as well.

And for banks looking to partner or acquire a FinTech startup, this pool of information could accelerate their new partner’s progress at a much faster rate than ever possible before.

Grow Together

Staying in contact with each other, sharing the wins and the losses, and keeping up the camaraderie just might help push the banks and FinTech startups ahead of the tech giants, who are also looking to get into the finance game. With their strong grasp on smart home technologies, AI voice assistants, IoT connectivity, and advanced data analytics, Silicon Valley companies can move with relative ease into any new technological field, including FinTech.

Many firms in this field often don’t share quality information with each other, but those that do through partnerships or other means will have a much greater chance of surviving to see the future. At least, until the FinTech talent shortage is over.