Banks and fintechs grow closer as winning customers toughens
Once at each others throats for business, financial rivals increasingly working in harmony.
Financial technology start-ups, or fintechs, are gradually starting to work more closely with banks in a marked shift for the sector which effectively came into existence to challenge traditional financial institutions, according to experts.
Many fintechs started out by promising to disrupt the banking industry with products ranging from peer-to-peer lending to mobile payment services.
But high operating costs and building a business without having the help of an established brand are now pushing them to work more closely, as opposed to against the older industry names.
They’ve been forced into collaboration with fintechs because of the fact they’ve realised customer acquisition is incredibly hard
“They’ve been forced into collaboration with fintechs because of the fact they’ve realised customer acquisition is incredibly hard,” said Neal Cross, DBS’s chief innovation officer.
In Asia, despite there being large numbers still not served by banks, cooperation between the two rival camps is also growing.
Winning new customers is also cheaper in Asia, he added, and so fewer are being forced into cooperating.
Total global investment in fintechs last year reached US$22.3 billion, a 75 per cent rise on 2014, according to a report by Accenture and CB Insights.
But investment into fintech firms seeking to collaborate with the financial industry soared 138 per cent to represent 44 per cent of all investment, up from 29 per cent in 2014, the study found.
