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Many continue to consider FinTech companies to be threatening for traditional financial institutions. In reality, though, the percentage of customers that have shifted towards digital-only solutions does not indicate complete stagnation of the traditional banking institutions. Instead, the increased collaboration between firms has fostered the evolution in the financial services models, leaving new and traditional players well-off with the help of innovative solutions. A recent PwC survey showed that 82% of banks, insurers and asset managers is increasing the number of partnerships with FinTechs in order to improve their product offering and value proposition on the market. However, there is a number of nuances that must be considered before any of such partnerships take place.
Self-reference criteria stemming from different cultural practices in the industry can destroy potentially beneficial partnerships. Dynamic developers and Wall Street representatives might have challenges in reaching mutual understanding. In order to create the conditions for successful synergies, both parties must be willing to collaborate, share data, revise internal structure if necessary and become more flexible. Transparent operation, along with clearly indicated goals and deadlines, is the key towards smooth cooperation.
Understanding the partner
By collaborating with FinTechs, financial institutions can overcome the difficulties they face with rapid development and increasing diversity of the financial ecosystem. Products must be unbuilt to single services in order for the entities to stay competitive and prosper in the current setting of the industry, and this is where an opportunity for collaboration emerges. Strategic partnerships with particular FinTech startups allow financial institutions to resolve problems of specific customer groups or reach specific target audiences by offering solutions to distinct challenges.
Leveraging data and applying innovation
Financial institutions possess considerable amount of useful and precise data sets, which may be utilized in order to improve product offerings and develop customer insights. The future calls for higher level of personalization, which can be reached through analyzing individual’s data and developing a specific solution adjusted to the needs of the customer. This will also help to improve interfaces making them more user-friendly for a seamless and convenient customer journey, while continuing to collect data that will be further reapplied. FinTechs became able to develop new risk management tools, optimize lists and expand customer bases through the use of advanced analytics. Yet, it is important to keep in mind that security issues must be managed by following international regulations on data processing in order to avoid potential discontent, frustrations and losses.
Experts predict that cooperation between the participants of the financial industry will continue to grow in the future, bringing traditional and new actors together in the aim for delivering services and customer experience of the new generation.