As new technologies and regulations bring new opportunities and challenges to the financial services industry, nearly two-thirds of established companies are leveraging fintech capabilities for growth, according to a new survey from Harvard Business Review Analytic Services. That number is expected to increase by 20 percent in the next three years.
“In the Game: Traditional Financial Institutions Embrace Fintech Disruption” surveyed 300 senior executives at financial services companies to gauge their views on the opportunities and threats brought about by newer, nimbler competitors that rely heavily on specialized software, algorithms, and technology to offer their services.
The study showed that traditional institutions are “banking” on brand recognition, customer trust, physical distribution channels, and experience navigating the complex regulatory environments to maintain a competitive advantage. In fact, nearly 80 percent do not feel an immediate threat from fintechs, but are learning from their efforts.
“This report reinforces the importance of collaboration and new partnerships in sparking innovation and new ways of working,” said Michael Miebach, chief product officer of Mastercard.
“Many traditional companies are already using technology to improve their business. Yet, there’s an opportunity to realize greater success by thinking differently and combining experience with the agile nature of fintechs.”
Over the long-term, every financial services company has an opportunity to learn from today’s emerging fintechs, particularly in the areas of agile business practices, digital-first business plans and leading with an entrepreneurial mindset.
As they do, data and analytics will play an even more critical role. Companies will increasingly use these capabilities to support risk management and the customer experience. Data-driven companies will have a greater advantage in terms of personalizing the customer experience and boosting customer loyalty.