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Banks and Payments Tech Meet in the Middle, Reach Inclusion

The fast-moving world of payments technology, also known as fintech, continues to threaten the revenue flows of banks and the way the world does business. However, some fintechs have recognized how banks and payments can collaborate to build a better customer experience through innovation and speed. Those that continue to work alone and not work to become allies instead of adversaries will be left in the lurch.

Using the Differences Between Banks and Payments to Make Something Better

When financial institutions and fintechs work together, they are taking the bests at what they do and making something even better. Since banks are process-oriented, they operate with a long-established regulatory framework and other system that has hurt their ability to implement new technologies that help improve the customer experience.

On the flipside, Fintechs are more customer-focused and not bogged down in regulations, and time-honored operating models. Though this approach allows them to leverage the latest technology, such as artificial intelligence to customize customer experiences, they have not built up the trust that’s the heavily-regulated banking system can offer.  However, by combining their strengths, they can deliver all of it.

Companies that Have Moved Toward Collaboration

Some banks, like Citibank, Barclays, and Goldman Sachs offer accelerator programs for payment techs. These programs offer seed money, mentoring, connections, and education. Meanwhile, Deutsche Bank and HSBC, for example, have invested in fintech firms, offering solutions, like data analytics, personal finance, and wealth management. These financial institutions have recognized the opportunities and have ran with them.

What This Means for the Future

Though banks and fintechs continue to work out the kinks with the culture gap being their biggest obstacle, both are seeing how they can help each other. Banks, which manage risk, can help fintechs understand and how to manage regulatory challenges and built up trust. Fintechs, on the other hand, can help banks better adapt to the innovative, and frequently-evolving culture of today. Most importantly, the groups not only need to help each other because it looks good, but because it will bring about something much better. The best collaborations will be mutually beneficial, sustainable, and complete change the nature of their offerings. Financial inclusion for unserved and undeserved populations will hinge on all of these factors.

The Final Say

The relationships between fintechs and banks will continue to evolve as will customers’ needs. Collaboration will make them power forces that can meet current and future customer needs and demands. Both will need to continue to look at their collaborative efforts and fine-tune them. As they assess them, they should figure out whether they are solving specific problems, does it save money, does it improve the customer experience, and what were the overall results. Once they have the answers to those questions, they will be able to know what works, what doesn’t, and what needs to happen next.

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