Fintech: Banking Disruptor or Distractor?

While many believe fintech start-ups and large technology firms are the source of disruption in the banking industry, some feel these new players are more of a distraction.

By Barbara Biro, Consultant, Digital Transformation and Customer Experience

The banking industry continues to evolve, but the terminology used to describe the developments can sometimes be numbing.  Some of the financial services buzzwords that you have probably heard a lot in the past year include digitization, blockchain, platform, transformation, augmented, crypto currency, biometrics, omnichannel and most people’s favorite… disruption.

More than just buzzwords, many of these terms represent what many traditional bankers believe is changing the ecosystem of an entire industry. ‘Challenger Banks’, Fintech Startups and even large technology giants are positioning themselves to be at the center of this change, many times leveraging these terms as part of their mission statements.

But, if you just put down your virtual reality glasses and try to find the underlying market mechanism behind most of this new fintech terminology avalanche, the result is very profound. The “disruption” is often more of a “distraction”, with this distraction working to the advantage of the new market entrants.

The noise is often much louder than the reality in the marketplace. And, in the midst of this distraction, many banks are forgetting their marketplace advantages and are blaming their inactivity on fintechs. Instead of embracing the next shiny object, they resemble a ‘deer in the headlights.’

So, what are the five biggest distractions created in the new financial marketplace?

Distraction #1: It’s All About the Technology

At the end of the day, it is not about the technology. It is about what the technology creates. Bankers do not need to deeply understand the underlying technology to realize that the original rules of business remain the same. The banking industry needs creative and talented people who can synchronize new technology with banking’s business goals; because the new digital consumer needs faster, and more convenient mobile and online services. The majority of new business is not generated by physical interaction any more. Instead of bringing customers to the physical touch points, banking needs to merge a wide variety of financial and non-financial ecosystems to a secured and easy to use electronic marketplace on behalf of their current (and future) customer base. An enhanced consumer experience is the alpha and omega of new age banking … not the technology. Bankers need to do what they do best, with new tools and borderless opportunities, and without distractions.

Distraction #2: Consumers are Flocking to Fintechs

The fintech marketplace is full of monoliners, who have invented one or two savvy digital solutions to ease a pain, generated by the lack of modern user friendly financial services. But the majority lack a full range of financial services and even more lack scale. Many are losing market advantage because they do not have the capital or marketing savvy to achieve a vast customer base or they cannot keep the promises they made due to overly aggressive business plans ...

To read the rest of the article regarding the potential of Fintech to be a disruptor and/or a distraction,  go to the complete article here ...

Follow me on Twitter
Read more of my articles on The Financial Brand 
Download '2016 Retail Banking Trends and Predictions' Report