Adapting to change: Insights from this week’s fintech industry news
The fintech sector continues to evolve against a dynamic and unpredictable landscape. Traditional banks and fintech disruptors are all feeling the pressure to adapt quickly. But how are they doing it?
This roundup of recent fintech news highlights how various players are responding to these shifts through strategic collaboration, innovation, and adaptability. Here’s a summary of what’s happening now.
Traditional banks need to face change head-on
Traditional banks are at a crossroads. They need to change or risk becoming obsolete. A recent article from FinTech Futures discusses this urgent need for transformation.
Key Takeaways:
Customers are happy embracing a range of banking options: “40% of UK citizens now have digital-only accounts,” and they are happy using multiple providers for specific functions, “having a few apps for finance rather than an “everything app” is not a significant psychological burden.” As customers diversify their banking options, the market dominance of traditional banks is gradually eroding.
Traditional banks are losing their visibility: "Many high-street banks are closing branches," leading to the loss of "the last vestige of a bank’s physicality," as "the bank card is no longer the primary payment tool." With more reliance on digital solutions, traditional banks are becoming less visible and tangible.
Embedded finance is removing direct customer relationships with banks: Banking is "being opened up, ‘cloudified’ and embedded," with companies leveraging this trend by "offering financial services through well-known brands," which "strengthens brand loyalty and opens up new revenue streams." Traditional banks risk losing direct customer relationships as financial services become embedded in non-bank platforms, but they also have an opportunity to innovate by embracing Banking-as-a-Service (BaaS) models.
Fintech disruptors are creating a blueprint for success
Fintech disruptors are setting the pace. They’re fast, agile, and innovative. The Forbes article gives us a glimpse into what makes them successful.
Key Takeaways:
Unlocking growth at scale: Fintechs must "channel their expansion into reliable systems that can grow with the company," ensuring sustainable growth while laying "a solid foundation for their way to global disruption."
Building trust as a priority: It’s crucial for fintechs to "improve communication and transparency" and ensure that "security and guaranteed regulatory compliance" are prioritised, as these elements build "trust and loyalty with your customer base."
Driving innovation and looking for breakthroughs: Fintechs need to "pioneer innovative solutions" and "challenge the traditional processes within financial services" to stand out, using strong customer trust to "drive customer acquisition, loyalty and revenue growth."
Amazon and Barclays are showing us what a successful fintech-bank collaboration looks like
Amazon and Barclays are setting an example. They recently launched a new credit card in the UK. This is a game-changer. FinTech Global provides the details.
Key Takeaways:
Collaborating for enhanced value: Amazon and Barclays have teamed up to launch a new co-branded credit card in the UK designed to "offer a credit card packed with perks," providing "enhanced value on their everyday purchases."
Exclusive customer rewards and benefits: The Amazon Barclaycard "allows customers to earn rewards on every purchase," including "2% back on all Amazon spending during key shopping events" for Amazon Prime members, with "no annual fee" and a "£20 Amazon.co.uk gift card" for new customers.
A broader strategic move: This credit card is part of a broader strategy, following the launch of "‘Instalments’ by Barclays in the UK," and Amazon's "rewards-based Visa credit card for German consumers" in partnership with Banco Santander, reflecting Amazon’s ongoing expansion into financial services in Europe.
Embracing strategic collaboration and innovation
There’s no doubt that banks and fintechs need to keep adapting to ever changing market conditions. Embracing change is not optional. It’s essential. Those who innovate and collaborate will lead the way.
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Sources:
FinTech Futures. "Is It Time for Banks to Turn and Face the Change?" FinTech Futures, 13 August 2024.
FinTech Global. "Amazon and Barclays Unveil New UK Rewards Credit Card Offering Exclusive Perks." FinTech Global, 13 August 2024.
Forbes Tech Council. "What It Takes to Become a Global Fintech Disruptor." Forbes, 13 August 2024.
