Game of Banks: What if Interests Rise?

Author: Rosalia Mazza

FinTech Weekly analyzes the most relevant fintech news of the past 7 days to give you a comprehensive outlook of what’s happening in the fintech space.?

The Background

The Federal Reserve is raising interest rates.?

This may be a challenging event for all those financial companies that use low – or zero – rates as their major competitive advantage.?

Fintech companies like neobanks are among them. The question is: will it be so easy for new banks to acquire and retain customers in the future?

The Wall Street Journal recently published an article that tries to answer this question: Banks Can Trump Fintech as Zero-Rate Era Ends is a good read if you want to figure out what might happen if fintech companies lose their advantage over traditional banks.?

But we want to take into account different opinions.?

Ron Shevlin shared once again Cornerstone’s data on Forbes: Will Banks Overtake Fintechs As Interest Rates Rise? Don’t Bet On It clearly assesses that low rates are not the only benefit that make people choose fintech companies.?

Technology plays a major role, but not only to attract customers with lower costs: neobanks manage to involve people better than traditional banks, to build stronger relationships with them and to better identify their needs. The speed of the process to open and manage accounts, and profit perspectives, are other two major factors.?

According to Shevlin, the real point is that traditional banks and neobanks are playing different games.?

In the meanwhile, traditional banks take preventive measures: their involvement in the most innovative platforms and services offered by technology is proof of that.?

After JPMorgan, also HSBC joins the Metaverse. Major fintech companies offer BNPL solutions also to buy gasoline. China wants to improve its fintech industry.?

This and much more in the latest number of FinTech Weekly.?