It’s a well-known fact that today’s digital landscape is forcing traditional businesses to integrate new technologies and business models in order to stay relevant and adopt the new habits of both individuals and businesses.
This is particularly evident in banking, where we are seeing a shift in the way that we interact with financial services, such as savings, lending, investments, and remittances. Consequently, more and more fintech startups are emerging to fill consumer needs, which is changing the financial industry and encouraging traditional banks to innovate or collaborate with fintech startups.
The question of how fintech is changing banking was at the core of a recent panel that Trulioo’s General Manager, Zac Cohen, participated in on October 26, 2017. The Fintech Panel | A Discussion on Innovation in Banking was presented by Brainstation and featured local Vancouver fintech professionals:
- Natalie Cartright, Co-founder of Finn.ai
- Tea Nicola, CEO & Co-founder of WealthBar
- Spencer Chen, VP of Marketing at Koho
- Zac Cohen, General Manager at Trulioo
Here’s a synopsis of the wide-ranging panel discussion.
The Evolution of Fintech
When fintech stole the spotlight, the emphasis was on disruption; new fintech companies would totally replace the old, slow moving incumbent banks. While many fintechs still follow that model, many others are now looking to partner with banks.
Note though, there are significant geographical differences regarding the approach to fintech. Some markets are much quicker to adopt new technologies than others. It seems any cultural conservatism is amplified when dealing with something as important as money.
A big difference in adoption between the US and Canada was noted. New fintech apps in the US can quickly take off – they are new after all. In Canada, people tend to use the same bank for a long time and why change?
This conservatism extends to the banks themselves; in Canada the banks are ‘thoughtful’ in making any change. That conservative attitude served them well in the financial crash of 2008, as they were one of only banking systems spared from the carnage. As their system seems to be working, why change?
Besides reluctance at adopting new technology, what are some other bottlenecks for fintech? The biggest challenge, noted by all panelists, is the lack of talent. The desire to expand is held back by the realities of finding enough skilled workers to do all the work. Two types of positions that are hard to fill are computer engineers and data scientists. (Note: Trulioo is hiring, please check out our job board for the latest career opportunities to be part of an award-winning fintech/RegTech company)
Another bottleneck seems more self-imposed. With the internet, a fintech’s location is a non-factor, yet it still seems to affect the mindset of a company. Does a fintech really need to be in Silicon Valley to succeed? Is going after the US market the only way to make a mark for yourself? While there are advantages to being in the big markets, it’s not necessary and your attitude can make all the difference.
Fintechs and Banks
Banks are potentially the best of customers, but require lots of patience and persistence. Banks offer a lot of benefits to work with; they are willing to pay, they offer credibility, and once they trust you it can lead to a long, fruitful relationship.
Building that trust is a challenge though. Due to the nature of their business -- protectors of money -- banks have a conservative bent. Most, if not all, banking customers appreciate this inclination. Thus, it’s natural that the process to build trust is difficult; the sales cycle, the legal confirmation process, and the support integration all take time
[tweet_dis excerpt="For fintechs to make inroads they need to speak the banks language"]For fintechs to make inroads they need to speak the banks language[/tweet_dis]. As with any good marketing, understand their needs and talk to them about what they care about.
Global RegTech Ecosystem
There are two major issues that are affecting RegTech solutions on an international level; protection of personally identifiable information (PII) and the individual having ownership and control over the use of that information.
With the recent Equifax hack, the importance of protecting PII has risen rapidly in the mind of consumers, businesses and regulators. While it always has been important, now it’s front of mind and any fintech needs to project that they’re on top of the issue.
As for users having power over their own PII, consumers want to know how their information is being used. There’s a growing backlash to companies snooping on our personal lives and financial information is especially guarded.
Besides PII, other trends involve ever-changing regulations. The key here is to have adaptable, flexible systems. That way, no matter what happens, your company is ready.
The financial industry is changing, there’s no doubt about that. While the changes in banking might not be happening quick enough for those in fintech, increasingly there is a blurring of the lines – banking is going more towards fintech and fintech is going more towards banking. Eventually, it might just be banking tech.