With the sands of change shifting on a near-daily basis, insights from those on the frontline are increasingly important. With that in mind, we sought out InstaReM’s CEO Prajit Nanu for his views on everything from cross-border payments, PSD2 and the need for collaboration…
1. What is the biggest disrupter you’ve seen in the payments industry?
Technology has revolutionised the payment industry, with fintech-powered solutions being the biggest disruptors and both businesses and consumers are benefitting. Cross-border payments – subject to delays and unfair costs for decades – have been disrupted by digital providers making the experience more accessible to people living in developing countries.
Not only are payments now getting fairer, they are also becoming faster, which is a great merit to a stronger commerce and payments ecosystems, apart from the individuals depending on remittances from overseas. For many recipients around the globe, each additional dollar received in remittances could mean a better healthcare or better education. I think the disruption in the cross-border movement of money is one of the most significant disruption in the payments industry that is having a profound impact on over two hundred million migrants and consumers across the globe.
Cross-border payments – subject to delays and unfair costs for decades – have been disrupted by digital providers making the experience more accessible to people living in developing countries.
2. Where are banks failing in attempts to collaborate?
I believe banks are willing to partner and collaborate with fintech companies and while announcements are being made, there are still some barriers preventing further collaborations. Collaborating with fintech means moving out of their comfort zone and undoing and unlearning a legacy of decades, which is not easy. Resources or lack of them are also proving to be difficult for banks with many wanting to partner with digital solutions, but not having a full-time team to dedicate to the partnership projects.
Most banks we work with in Asia and Europe are cognisant of the potential benefits of the Banks-Fintech collaboration and are more open to partner with innovative fintech companies. In the long-run, I think, the banks that collaborate and work closely with innovative fintech companies, will emerge as winners.
3. What do fintechs need to do to become better collaborators?
To begin with, fintech businesses need to ensure that they have similar principles as banks. Pillars, such as people, finance or business characteristics have to match. It’s also imperative for fintech companies to communicate how partnering with them can add value to banks and their customers. Fintechs must consider the banks as their partners and not competitors to develop trust and confidence. Finance is a complex ecosystem -fintechs need to get their message out there of how collaborating with them can better serve customers.
Collaborating with fintech means moving out of their comfort zone and undoing and unlearning a legacy of decades
4. How is the collaboration model changing the way fintechs and banks compete?
The collaboration model is challenging both services to do better, but also providing the opportunity to improve in areas of weakness and learn. For example, fintech are using banks’ customer service standard to improve services, whilst banks are benefiting from the digitalisation and pace of fintech services. The winner of the bank-fintech collaboration are the consumers.
5. How will PSD2 change the game for banks?
It’s become fashionable to bash PSD2, but it has fostered innovation and genuine collaboration between established businesses and startups in the finance space. We strongly believe that PSD2 will increase the quality of service provided to customers and offer transparency. Essentially, customers will have the opportunity to choose services that cater to their individual needs. The regulation also makes it easier for banks and fintechs to work with each other and use greater resources.