Fintech in Banking: Why Banks Desperately Need This

July 14, 2017         By: Steven Anderson

Banks have been behind the eight ball as far as innovation goes these days. Sometimes it just seems like they’re not keeping up the way they should. A new report from EY shows not only how deep the lack of innovation rabbit hole goes, but also why banks are going to be seriously behind if more financial technology (fintech) efforts aren’t put in play at the banking level.

Naturally, mobile payments and mobile banking operations are a huge part of this equation, and the good news is there’s been a lot of gains here. For the last three years, the EY study notes, banks have been focused—and still are—on bringing fintech to payments. Better yet, it’s likewise clear that fintech is poised to be part of all of a bank’s processes, from gamification options to regulatory technology.

There’s one big problem here: the spirit is willing, but the flesh is weak, so to speak. Basically, banks talk a big game and have a clear interest in fintech just about everywhere, but finding the right provider of this technology has been a challenge.

So what can banks do here? It’s simple, but not easy: work more aggressively to partner with fintech startups and similar businesses to bring in new and worthwhile options. Whether this is done by a joint program or a lead program, each has its own benefits and drawbacks to consider.  Yet fintech firms also have a mission here: to present their cases well to banks, who are in serious need of innovative new tools like mobile payment systems, check deposit via photograph, biometric security, and more.

Banks aren’t all to blame in the fintech shuffle. While they’ve gotten in their own way a bit trying to preserve the “we’re basically no different from the shotgun-toters who kept your great-great-great-granddad’s cash safe from the James Gang” image, that image is still important to keep people coming back. People want their money protected.

Yet people want to do more with their money, and with new technologies coming out, banks must advance or risk getting left behind. A proper partnership with smaller fintech firms—and maybe some resources devoted to advancement—would be a help here and could give banks the edge they need in an increasingly mobile market.