The future of financial services - the ecosystem approach

What good is a system if its parts are fragmented and siloed? How well can any machine run if its individual pieces aren’t able to communicate with each other in order to optimize performance and deliver the best possible product??

The questions above are hypothetical but can be applied to the current state of?FinTech. That is to say, a not fully realized, optimized, and well-oiled machine. I don’t mean to imply that the sector is in complete disarray but there are significant hurdles ahead before it can be a complete force that a sector like retail has become.??

To get to that pinnacle and for?FinTechs?to survive and thrive they must be part of an ecosystem. Without an ecosystem things will remain fragmented. Imagine a great banking application with intuitive UI and a great UX. The app looks polished and runs well but if it’s not working in cooperation with government and financial institutions, it’s not particularly useful. The platform won't ever be fully integrated and it’s potential to service customers will never be realized. For the future of?FinTech?to thrive, all of these aforementioned pieces of the puzzle need to come together.??

Shifting Customer Expectations?

?As customer’s needs change, traditional models of service need to adapt. The shift to a digital society has left many traditional financial institutions unable to meet the changing demands of their customers. Consumers who are plugged in all of the time demand access to their financial services all of the time. Therefore traditional working hours no longer apply. In this instance, older institutions can open up and work with?FinTech?to provide 24 hour service through the use of artificial intelligence. On top of that, improved cellular networks and smart phones have customers expecting (often demanding) quick and seamless service. This satisfaction can only be achieved through integration and participation in a healthy ecosystem.??

Models of Change?

?As I mentioned above,?FinTech?can look to other areas of the economy, such as retail, for visions of how a seamless financial ecosystem might look. Pushed by a pandemic, the retail industry has propelled itself forward due to a complete acceptance and embrace of changing customer needs and behavior. The?FinTech?players vying for a share in their respective sector need to be equally as innovative and adaptive in order to prevail.??

Those that make it out on top of the envisioned?FinTech?ecosystem will be providers who can build trust. In addition to building great apps and networks, users will need to feel safe, that they are operating within a system that takes their security and privacy seriously. Older financial institutions come to the table with this very customer base but many don’t have the infrastructure to provide a full suite of digital services to customers. The ecosystem can bridge that gap and transform legacy banking services into modern, digital powerhouses, while bringing customers to new, cutting edge?FinTechs.??

Roles in a future FinTech Ecosystem?

A well-performing FinTech ecosystem creates a new economy of partnerships in which many different market players are connected. So, to be successful in the future,?FinTechs?and traditional financial service providers need to ask themselves: what role do I want to play in this new ecosystem? This?question can only be answered if a change in mindset succeeds within companies. Ecosystems will only become successful if other market players are no longer seen as competitors but as partners. Only then goals can be achieved together that each individual company would never have accomplished.??

If this shift succeeds, then a customer-centric FinTech ecosystem with integrated services will emerge - a win-win-win scenario for each individual partner, for?FinTechs?and traditional financial service providers, and for end customers.