The current disruption posed by fintechs has “the potential to shrink the role and relevance of today’s banks”, a prominent banking sector executive has forewarned.
The product of a panel discussion between banking sector executives and new fintechs, the Fintech and Banking: Collaboration for Disruption Report 2016 provides insights into emerging themes that will impact on the banking world.
According to the report, the banking sector “finds itself at a crossroads”, as the GFC has forced it to take a strategic turn and review its standards.
“This is a revolution which has only just begun and one in which banks have found new allies and rivals, depending on how they approach it,” the report said.
The report went on to say that the lines between bank-owned and operated services and those delivered by new players and external partners have become “blurred”.
“The result is that traditional banking services are being disintermediated,” it said.
Lender and Axis Corporate managing director Daniel Meere commented: “Banks must recognise that fintechs are players who are here to stay in the sector and that they will, with varying degrees of success, overcome the barriers they currently face.
“The current disruption has the potential to shrink the role and relevance of today’s banks. [But] we believe that by putting the customer at the heart of their visions, strategies and innovation initiatives and collaborating with the right fintech firms, banks can create better products and services that make them an even more essential part of the new banking age,” he said.
Vincent Bastid, the secretary general of financial association Efma, added that fintechs are challenging the traditional retail financial services landscape which is something that banks cannot ignore.
He explained that the findings from the panel discussion show that most industry experts believe that a joint-venture approach between banks and fintechs will “foster the most successful industry ecosystem”.
“If they can achieve this, then they will be able to create a product offering that will better attract and retain customers, and ensure longevity well into the future,” Mr Bastid concluded.
[Related: A checklist for fintech success]