Can banking and fintech coexist peacefully? The attitude of traditional financial service providers appears to be changing, even though traditional banks may have historically regarded fintech startups with worry or distrust. Fintechs are no longer necessarily seen as competitors by established banks and financial service providers; rather, they are frequently seen as beneficial allies when these traditional businesses aspire to achieve new objectives or boost client engagement.
The IT businesses gain from the collaboration between banks and fintech. They can grow into new markets while gaining access to existing banks’ regulatory advantages. The future of the financial services sector and the technology sector depend on continued cooperation and collaborations between fintech startups and banks.
Why Fintech Collaboration Is Essential for the Future of Banking
Where does the typical customer go for help or advice when they need money? Uncertain though it may be, their bank is likely not the answer. Only 14% of customers consulted their bank for financial help after experiencing a life event that had a substantial impact on their money, according to a poll done in April 2020.
Customers frequently hesitate to ask traditional financial services providers for help and advice because they lack confidence in those organizations. 41% of respondents said they were terrified as the 2008 recession developed, and 53% said they were upset about the circumstances that led to the collapse. From 53% in 2004 to 22% in 2009, the proportion of persons who stated they had “strong confidence” in banks decreased. Nearly ten years later, 32% of consumers, still less than one-third of the total, reported high confidence in banks.
Contrarily, individuals tend to place much more trust in technology companies than in financial organizations. According to a 2019 Pew Research survey, 50% of respondents said they thought tech corporations positively impacted the nation. Three-quarters of respondents to another survey, the Edelman Trust Barometer, trusted the IT industry. When banks collaborate with fintech firms, they stand to gain greater consumer confidence in such companies.