Fintechs are no longer the enemy. They’re gradually moving into the role of trusted technology partner. The sooner you recognize and accept that, the better off your financial institution will be.
In this episode of The Digital Banking Podcast, ASA founder Landon Glenn and host Josh DeTar discussed digital transformation and the vast number of fintech launches in recent years. They discuss the danger these companies present to traditional FIs, but also the challenges fintechs face when coming to the market.
Glenn also explained the terms open banking and collaborative banking, and shared how they benefit traditional FIs and fintechs alike. Finally, he explained why creating opportunities for all is the right path forward in the finance space.
⚡ When FIs and fintechs work together, everybody wins. FIs and fintechs are slowly learning that they need each other to survive. ”One recent stat I saw is that 88% of Americans are now using fintech in some way,” said Glenn. “These providers are approaching the communities, and they’re offering a service you can’t get from your bank. And they’re trying to steal market share from those institutions. So I think it’s a big problem because you are losing that local feel, that local touch of your local institution, and all the benefits you get in exchange for a piece of technology that helps you connect with something you’re interested in. He continued, “If you want to work with a bank or a credit union and bring your fintech to market, most institutions offer zero fintech right now. Why is that? Well, it’s pretty hard to do, but they want to offer them. So that’s a big problem.
⚡ Customers don’t realize how valuable their data is. Many, if not most, consumers are willing to surrender their personal information with the click of a button to get what they want online, with no real understanding of what they’re giving up and why. ”I read a statistic that over 80% of Americans don’t understand what they’re giving away and what’s happening with their data,” said Glenn. “But when you ask them if they like it when they try out a new app you’re making, they give you their bank or credit union username and passwords to all of their money, they say, ‘No, I don’t like it.’ But, they do it anyway because there’s no other choice.”
⚡ Community FIs are vital to our success, so we must support them. Glenn espouses what he calls collaborative banking, where traditional FIs and fintechs work together to meet customer needs and grow. ”Central to our mission is the collaborative creation of opportunity — a world where the institutions, the credit unions, and the cores can all win,” explained Glenn. “Even our PR firm said, ‘You’re one of the first companies that said that we want our job to make the core look good. We want them to have an awesome experience.’ And I’m like, yes, why not? If everybody’s happy and everybody’s getting what they want out of their core and their technology, then the credit union’s going to increase revenue, the members are going to increase engagement, they’re going to increase their wealth”