Formica AI & FinTech Journal

Banks Fight Big Tech with Fintech Partnerships

Nearly half of all banks are looking to acquire majority stakes in fintech companies to defend against the threat from Big Tech companies entering the payments market, according to a report by The Economist Impact. The study, which surveyed 300 banks on behalf of core banking platform Temenos, found that 40% of banks see tech giants as their biggest competitors in the next five years. Consumer preferences for one-stop shop super apps and dissatisfaction with the speed and cost of bank transfers are driving this shift in the market. As a result, banks are seeking to consolidate their market offering and create online payments services capable of rivaling large incumbent technology giants. This move comes as banks have been pressing financial regulators to increase oversight of Big Tech companies and apply the mantra 'same business, same rules' to level the playing field.

Fintechs Empower Young Consumers Feel Confident Switch Banks

A recent report by finance comparison site has revealed that younger generations are more skeptical about switching banks than previously thought. The study found that only 14% of UK adults have taken advantage of bank switching deals before, with 18% of Gen Z, 13% of Millennials, and 12% of Gen X citing the belief that switching banks is too time-consuming as the reason for not switching. Meanwhile, the key motivator behind staying with a bank for older generations was loyalty. Fintechs can play a pivotal role in the switching process by providing all the information a customer needs to feel like they are making the correct, informed decision. Fintechs can also offer customized financial advice, product recommendations, and support, making users feel valued and understood, irrespective of their age. To entice younger generations to switch banks, banks can offer to roll over existing standing orders and direct debits in addition to a variety of other personalized benefits.?

More Than a Auarter of Brits Using BNPL - FCA?

More than a quarter of UK adults, approximately 14 million people, have used Buy Now Pay Later (BNPL) at least once in the six months prior to January 2023, according to research by the Financial Conduct Authority (FCA)1. This is up from 17% who said they had used it in the preceding 12 months in May 2022. The FCA has worked with PayPal and QVC to make their contract terms easier to understand, although it does not yet have regulatory oversight over BNPL products1. People who have used BNPL more than 10 times in the last 12 months are over twice as likely as those who have not used BNPL to also have a high-cost credit product. They are also almost twice as likely to have increased the amount of debt on credit products over the last year and over four times as likely to have missed a payment of a bill or credit commitment in three of the last six months.