In times of profound transformation, alliances are a great strategy to go through the process without regrettable losses. This has been understood by banks in different parts of the world, which have joined forces with fintech startups to offer solutions to the transition to the digital world that financial institutions are currently facing.
Basically, fintech ventures seek to design financial services based on technological innovation. The term fintech is composed of the two words: financial and technology and encompasses developments to facilitate payments and transactions, online banking, market trading, crowdfunding, financial security systems, online advice and all kinds of applications for managing financial activity from the digital space.
The knowledge attained by these technological undertakings in the financial sector initially competed with the platforms of banking institutions, but was later also sold to the service of these institutions with the intention of facilitating technological processes within them.
Are fintechs in competition with financial institutions?
Financial institutions no longer see fintechs as competition, but as allies in the development of bridges that allow them to adjust securely and reliably to the demands of the digital world. The experiences of these ventures in Chile, Panama, Colombia, Spain and Peru have made a difference and demonstrated the functionality of merging this innovation with the daily activity of a banking institution.
Banking service providers have come to realize that the transformation process they are undergoing has The only way to achieve this is through technological innovation, which is easier to support for fintech ventures, since they act more quickly in these matters than banking institutions, which evaluate the risks of their decisions much more rigorously.
Developments in this area have allowed the banks to not only offer a more harmonious and reliable experience to its users, but it has also served as a way to get closer and get to know customers better.
The fintech business model is based on four main pillarsThe most successful of these ventures so far have been in the areas of payments and transactions, personal finance management, investment consulting and marketing platforms, and new approaches to financing and lending. So far, the most successful ventures of this nature have been those related to payments and transactions, personal finance management and investment consulting and marketing platforms.
When it comes to dealing with change
Transitions are periods of growth and adjustment to new dynamics. In the face of technological irruption, the banking sector has had to adopt new models in line with the changes that have taken place. However, all these processes must be strategically planned in order to minimize risks and, above all, to optimize the experience of the institution and its customers.
For the process to occur as smoothly as possible, the following recommendations should be taken into account:
- Understand customers in order to design specific strategies.
- Partnership with technology companies that manage more dynamic business models.
- Support flexibility with the intention of driving innovation.
- Implementation of tax treaties, compliance and e-commerce legislation. In which specialized law firms have the responsibility to support the correct commercial turnaround, so that these ventures can be effective.
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