Fintechs grow closer to banks
24 January 2018 - A survey (not published) held by ING Bank and Illuminate Financial has found that fintechs and banks believe they are partners in disrupting the financial services market.
- Survey shows banks view fintechs as enablers, playing a positive role in supporting banks
- However, navigating organisational decision making remains a challenge for both
- A disconnect between banks and fintechs on the most important motivations for partnership was identified
The vast majority (70%) of banks surveyed view fintechs as enablers and playing a positive role in supporting the wholesale banking sector. This might come as a surprise to those who have positioned the businesses as direct competitors.
However, the relationship is not without challenges. Both banks and fintechs agree the primary challenge in partnering together is navigating organisational decision making. Sixty percent of banks acknowledge that it can be very difficult or difficult for fintechs to connect with the relevant people in banks and 78% of fintechs agree.
The ‘Banking on fintechs’ survey was carried out by ING UK and Illuminate Financial in Q4 2017, with 10 bank respondents and 100 fintech respondents.
When it comes to the main drivers of partnering, fintechs recognise compliance, operational costs and competitive pressures as drivers for bank adoption of fintech solutions. However, the survey results also show that client attraction and retention is the main driver for half of bank respondents, while only 10% of fintechs believed this was a main driver for banks – suggesting a disconnect between the two.
Both sides were clear on where fintechs can currently offer banks the most value: compliance and know your customer (KYC).
Ian Hollowbread, a director for CAO Enterprise Office at ING, comments: “Customer expectations are changing, which in turn is driving innovation. We are committed to providing our customers with a high standard of service and meeting their technology needs. Partnering with fintechs allows us to develop products and services to empower our customers to stay a step ahead by making banking with ING convenient, clear and easy.”
Mark Beeston, managing partner at Illuminate Financial, comments: “The feedback we are hearing from the capital markets fintech community is clear: we need to narrow the gap between large financial institutions that need solutions and early stage entrepreneurs that provide them. A long, complex and often costly sales cycle continues to lock innovative technology out of the banking sector. We look forward to working closely with ING to breaking down this barrier.”
About Illuminate Financial
Illuminate Financial Management LLP is a venture capital firm that crosses the chasm between capital markets fintech and the financial institutions it should serve. The firm was founded in 2014 recognising the growing importance of fintech but questioning how much it was contributing to building more sustainable financial institutions. IFM have created partnerships with core strategic investors and a growing number of capital markets firms to gain real insight into what the market needs. We leverage this to find, validate and fund early stage companies and harness our extensive experience across banking, entrepreneurship and consultancy to help these companies achieve their full potential.
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