Changing the Game With Financial Technology
Business Solutions Financial technology startups have had a dramatic impact on the financial sector, with a growing number of banks scrambling to stay relevant.
In order to compete in the marketplace of traditional financial institutions, many companies have turned to new technology and found success. Financial technology, or FinTech, startups have not gone unnoticed by enterprise banking institutions that appear to be in need of an attitude adjustment.
“Every FinTech has as part of its central goal reducing friction and improving the customer experience,” explains Brett King, best-selling author and host of the “Breaking Banks” radio show on VoiceAmerica. “The nature of the way the incumbent system works — the inertia they build around processes, acquiring a customer, approving a customer and the interface around that — is very difficult to change.”
King, who is the founder of the mobile-based banking service Moven, says feedback shows customers appreciate transactions being made faster and easier, such as opening an account in just 90 seconds. With traditional banks, customers have typically had to change their behaviors, like it or not.
“That's why there's a gap, and why banks increasingly find themselves incorporating FinTech user experiences and technologies into their stack, because they realize they aren't going to be able to change fast enough. By them absorbing a FinTech capability in this respect, they end up getting it cheaper and faster than they could do it internally, and they get the benefit of that design experience that the FinTech has put in place.
“Customers appreciate transactions being made faster and easier.”
Making the transition
According to King, while community banks can't compete with Google or Facebook as far as technology resources, they can make significant changes. Embracing a gigging economy, where organizations contract with independent workers for temporary engagements, is one option.
“Bring in skills where you need them for a short period of time,” he says. “I think that's probably the solution.”
He also suggests reaching out to local universities and tech-savvy graduate students to establish internships that can lead to meaningful engagements.
For smaller banks, the technology challenges of integrating with FinTechs are becoming less of an issue.
“I think the biggest hurdle right now is the discussion around the cloud and maybe identity data,” explains King. “Once we get through some of those challenges, I think you could look at FinTech and some of these emerging core technologies as new bank platform capabilities, new extensions of existing technologies — with a very low hurdle technically, in terms of integration, particularly with APIs.”