For the most part, fintech propositions – purpose-built to optimise mobile and digital channels – came into their own during the COVID-19 pandemic. Banks saw a huge increase in demand for online and mobile banking, and digital payments have seen a similar growth trajectory. Once customers have made the leap to digital very few will want to return to an analog experience.
Industry changes that would have normally played out over several years were accelerated and many traditional banking and payments business models have been irreversibly changed.
Seize new opportunities
Key to ongoing success is the ability to spot new, more efficient ways of working and to respond to customer needs in an innovative, agile and cost-effective way. Recent research highlights:
- The importance of re-examining mission and business models. While it’s likely fintechs will continue generating new and transformative solutions, Deloitte emphasises the importance of keeping an eye on future opportunities beyond COVID-19
- Changes in business models undertaken by some two-thirds of fintech firms in response to the pandemic include reducing fees, changing qualification criteria, and easing payment requirements found a joint study from the World Bank, Cambridge Centre for Alternative Finance, and the World Economic Forum
- Many banks are now emerging as more responsive and nimble organizations in response to COVID-19. Gartner predicts that global IT budgets will increase by 8% to $5.1 trillion, led by solutions such as cybersecurity, AI and cloud technology.
- The acceleration of fintech partnerships with financial institutions could be another important outcome of COVID-19 says Deloitte. Fintechs can benefit from access to capital, a means of distribution, and regulatory compliance, while banks can gain access to the type of digital solutions that customers crave.
Be bold, and maximize the value of cloud, APIs and platform
The adoption of cloud-based services and APIs and the move towards a platform-based model will underpin the analog to digital journey. Enabling financial institutions and fintechs to innovate and collaborate across the wider financial ecosystem through a platform-based approach is fundamental to driving innovation and the creation of new business models that will transform banking services. These include banking-as-a-platform, banking-as-a-service and embedded finance.
Increased collaboration in an open platform-based marketplace offers potential benefits for banks and fintechs alike. It also widens the scope of opportunity for all, something that in my view is essential in supporting diversity of ideas. With customers showing increased appetite for all things digital and acting and responding in new ways, now is the time for fintechs to be bold.
My advice is to experiment, use data and analytics to monitor what works, learn fast, take corrective action and build out from there – keeping stakeholders informed on progress, results and the momentum you’re building. Stay focused on the needs of your customers, respond quickly as things change and be open to collaboration to help accelerate innovation.
