Banks' perception of fintechs and their strategies to tackle this phenomenon

Do banks really view fintech firms as their competitors?

While some banks perceive fintech firms to be competitors, a majority of them are starting to perceive fintech firms as a partner in their endeavours. This can be partly attributed to the increasing focus of banks to drive innovation as they are making efforts to meet the rising customer expectations. Also, this shift provides opportunities for banks and fintech to gain from the relationship - Fintech firms excel in their ability to move quickly, innovate, and exploit new technology, while the banks have capital, deep customer bases, and expertise in dealing with regulators. However, banks are going to leverage a combination of different approaches to improve their own capabilities and also the take advantage of the fintech phenomenon.

Why a digital banking ecosystem is critical for banks?

With the increasing focus on innovation and rising aggressiveness of the fintech firms targeting different aspects of the banking business, banking executives agree that the pace of change is accelerating. Also, the executives agree that the industry is evolving into an inter-connected digital banking ecosystem. However, a majority of the banks do not have the core systems capable enough to sustain such an ecosystem. With the rising customer expectations, creating a digital ecosystem is a way to providing enhanced customer experience and innovative services by leveraging the participants of such an ecosystem. Also, this ecosystem can provide banks an opportunity to generate additional revenues, mitigate the risk of disintermediation, and finally stay relevant to the customers in meeting their financial and non-financial needs.