More than three-quarters (84%) of banks are considering new fintech partnerships in 2019 in a bid to improve customer experience (36%) and achieve real-time visibility (36%).
The research, commissioned by fintech provider Fraedom, also found that other factors inspiring banks to partner with fintechs are better cash and card management, speeding up digital transformation and cost savings.
“A lack of in-house capabilities is driving banks to partner with fintechs to answer the growing demands of their customers. Banks are beginning to realise that these partnerships allow them to overcome shortcomings in their internal skills base and benefit from innovative technology systems without having to invest time, money and resources in their development,” commented Kyle Ferguson, CEO, Fraedom.
The report also revealed that strengthening online security is a top business priority for almost two-thirds (60%) of banks considering fintech partnerships. This is followed by ensuring the right skills are in place to be successful, upgrading operational systems and increasing profits.
While these numbers indicate a growing appetite for partnership, they also reveal several perceived barriers remain. Concerns about security (40%) and a focus on in-house development (38%) remain fairly widespread. Banks also considered the challenge of integrating with legacy technology and budget to be among the barriers of partnering with fintechs.
“Many of the barriers preventing banks from partnering with fintechs are about perception and, in fact, partnerships can help banks to efficiently overcome many of these challenges,” added Ferguson. “Specifically, fintechs have the knowledge and technology systems in place to help banks mitigate a lack of capabilities in-house and low budgets, as solutions can increasingly be implemented out of box, without the need for internal development. Additionally, these solutions cater not just for the bank’s current requirements but also for their future roadmap.”