IT Finanzmagazin: Can Banks Digitalize? How Do Banks and FinTechs Cooperate?
Under this heading, digital natives met at the German Association for Financial Analysis and Asset Management’s FinTech Forum in Frankfurt that brought together representatives from FinTechs and traditional banks.
Chris Boos held the keynote, with his trademark prediction of AI-powered processes, pointing out that, in established banks, AI can and will help increase day-to-day efficiency by fully automating manual processes.
How, then, do the FinTechs come in here? At the Forum, altogether eight of them were present, pitching their asset management solutions for automated and intelligent investment decisions, employing Big Data and AI.
Next to Berlin as Germany’s current start up hub, Frankfurt now boosts the cooperation between banks and FinTechs, that, to this day, remain to be rather unequal partners. The two cities are clearly competing against each other over FinTechs, yet a certain complementarity seems to come into being, with client focus in Berlin’s startups mainly addressing the B2C sector, while their Frankfurt competitors focus on the B2Bs, mirroring the city’s general economic profile.
During the ensuing discussion – ‘Are we able to digitalize?’ between traditional bankers and FinTech representatives, the banks’ interest in FinTechs providing advantages became apparent once more. This particularly applies to the Sales side as well as the aspect of FinTech’s introducing the latest technologies into the banks. Reversely, by cooperating with banks, FinTechs themselves gain better market and client access that counterbalances end consumers’ still insufficient trust in FinTech companies. For both sides, then, a cooperation thus adds benefits.
Yet, the major success factor for cooperating seems to be a smooth merger of the banks’ mostly old-fashioned IT infrastructures with FinTech’s latest tech – no mean feat, as the bankers present ensured the audience. Some institutions have tackled this challenge already, setting up structures to develop solutions. Deka, e.g., established a test lab.
Another question intensely discussed was: Do Big Tech firms such as ‘GAFA’ threaten existing business models, if not the very existence, of banks? Perhaps not surprisingly, experts came up with markedly differing views. Whereas the bankers tended to be more optimistic, emphasizing their role as trusted partners for clients, the FinTech reps underlined the severe threat already posed to the banks by platform economies and open banking. Already, these are on their way to diminish product portfolios and create successful customer journeys. Although, then, banks and FinTechs disagreed on the current challenges’ consequences, yet numerous cooperation options are being investigated, and more are to come.
The question remains, bearing in mind Chris Boos’ initial prediction, when (not if), by using Big Data and AI-powered automated processes, a symbiosis between banks and FinTechs will become reality.
Click here for the article (German version).