What’s happening to financial services?

Apple Pay, Samsung Pay, Swish, iZettle, Klarna...the list goes on. It seems that tech companies are launching services that were once the exclusive domain of banks. How did this happen and where is it all going?

What exactly is a “FinTech”?

A decade on from the global financial crisis, the banking industry is undergoing radical transformation. Banks rapidly losing market share to agile FinTech startups must understand that collaboration across the financial services ecosystem is crucial to survival.

But, first, let’s back up a little…

Financial technology (FinTech) companies are not banks. They are agile tech companies that take inspiration from companies like Amazon and Google rather than traditional financial institutions, and they are on course to redefine the way we send, spend and receive money.

FinTechs work with vast amounts of data, which they use to generate insights into purchasing behavior, and coupling these insights with an understanding of emerging macro trends, FinTechs can provide better service to customers—from fraud detection to spending insights –  and boost both satisfaction and loyalty.

“There’s always this impression that banks and fintechs are enemies, which is wrong. Actually, banks see fintechs as a great way to understand what they’re doing and how to advance. What the banks have recognised is that fintech and technology companies are showing ways to operate and technologies that support the client experience.”

—   
Shane Williams
Co-head of investment bank UBS’s new online wealth management product SmartWealth

Collaboration is crucial

Banks face competition nowadays from a wide range of hungry FinTech startups that are finding new ways to meet customers’ needs. But, it’s not all doom and gloom for the banks. They are still symbols of money management and the #1 place to go for a mortgage, loan or other financial services.

Banks that embrace FinTechs – either through collaboration or acquisition – will be well-placed to resist the tsunami of new services fighting for customers’ attention (and money).

An good example of this trend comes from award-winning FinTech startup Minna Technologies, which partners with banks to offer their customers ways to better manage their finances, such as subscriptions. The Gothenburg-based company has already signed agreements and rolled out services with some of the Nordic’s best-known banks. 

According to their website, “We help banks improve the digital banking experience. Our subscription management products help banks increase customer engagement, improve customer satisfaction, and add new revenue streams.”

“There’s no logical reason why any of the big banks shouldn’t be able to turn this around. But, if you look at other industries that have been overtaken by technology, whether that’s the music industry or newspapers, there’s very few of them that you could point out that have made the turn.”

—   
Jason Bates
Formerly of challenger banks Monzo and Starling and now 11:FS

Want to understand FinTech better?

Understanding FinTech is a two-day course from Hyper Island designed to get everyone interested in financial services up to speed with the pace of change.

Over two intensive days in Stockholm, participants will learn the key principles of emerging technologies and develop a customer-first approach to designing financial services.

Using proven Hyper Island methodology, this course is designed to help you navigate the new financial services ecosystem and identify opportunities for your organization.