A battle between big tech firms and banks can only help fintechs
Banks need fintechs more and more as satisfaction with their customer services remains low, while a large portion of customers are open to an Amazon-like banking service. Banks can’t become like Amazon and Google themselves but they can use third parties to be able to interact with customers like them.
If a battle for customers between banks and big tech firms emerges the banks will need the fintechs to help them retain customers.
Capgemini and banking association Efma have just released their latest annual World Retail Banking Report. It found about half of customers say their experience across different bank channels was negative. Only 51% said in-branch experience was positive, while 47% said the mobile channel was and 51.7% internet banking. Meanwhile about 32% of consumers are open to receiving financial products from big tech firms.
And the banks know it. The survey for the report quizzed executives at the traditional banks as well and 70% of them realises that the disruption in the industry is being fuelled by good experience in other sectors. People want banking to be as easy as Amazon it seems.
This is why Amazon is already in talks with US banks about opening current accounts in the US in partnership with them. Meanwhile a future Google Bank is often bandied around.
If a battle between big techs and banks accelerates it can only benefit fintechs. Banks need the digital services to make sure they can fight off the likes of Amazon. They won’t want to do it themselves either so will invest in fintechs, to either help guide their development through innovation hubs and subsequently use their products, just use their products, or even acquire them fully.
According to Anirban Bose, CEO of Capgemini’s financial services unit, customer experience is the key differentiator today. “With fintechs, bigtechs, and other non-FS firms finding their place in the market, retail banking today is all about the customer experience when interacting with their financial institution.”
“As a new, open ecosystem – comprised of customers, traditional banks, non-traditional firms, regulators, and developers – takes shape, there is now a clear opportunity for banks to leverage digital transformation to retain customer relationships by re-inventing the customer journey and creating new revenue streams.”
The research found that about 71% of bank executives think they can generate non-traditional revenue via collaboration with fintech and bigtech providers, through developing new services or distributing third-party products via a marketplace platform.
“The retail banking industry is at an inflection point and needs to determine its role going forward in the open banking ecosystem. There is opportunity to innovate through collaboration as well as reinvention. It is an exciting time to be in banking as regulation, innovation, competition and collaboration merge to form the bank of the future,” said Vincent Bastid, Secretary General of European banking association Efma.