Banks falling in love with FinTechs
Can opposites within the financial services industry attract?
While psychologists believe that opposites attract, they also say that over the long-term they can drive each other crazy - Could this happen with Banks and FinTechs?
Although banks may have seen FinTech firms in the past as little more than a fad, concocted by liberal techy types, they have begun to comprehend that these disrupting start-ups are slowly transforming various sectors within the financial services industry – not least of all, the payment sector.
Banks and FinTech companies, often seen as adversaries within the financial services industry, have seem to struck a chord when it comes to the payment sector – and this is largely attributed to the emergence of real-time payments.
The Wind of Change Driving Banks and FinTechs Closer
The wind of change taking place in the payment sector, is down to the growing demand from consumers and businesses for real-time payments.
In an increasingly digital world, where instant notifications and immediate satisfaction have become the norm, traditional banks have not been agile or innovative enough to meet this customer expectation.
With current payment systems in UK, U.S. and Europe taking longer for payments to process than it would physically take to move the cash from one account to another, FinTech intellects have been working with national payment system providers to make the dysfunctional system better – and, boy, have they delivered.
Let's Get Together and Feel All Right
Real-time payments are soon to arrive in the U.S., with The Clearing House (TCH) developing an industrial-strength real-time payments system, which planners expect will overtime become the most widely used real-time payment system in the world.
Faster Payments, the UK real-time payments platform, which went live in 2008 is also getting a revamp, with more banks and also non-bank payment service provider being able to access the scheme, under the New Access Model.
FinTech companies within the payment sector have attributed to changes in both of these countries, down to their technical nous providing the core infrastructure behind the real-time payment systems. In addition to this, going forward payment sector FinTech companies will provide the connectivity processors that will help to ensure banks in both UK and U.S can connect to the core infrastructure, so that they can offer ubiquitous real-time payment services to their customers.
With banks needing FinTech assistance to deliver the service and payment sector FinTech companies needing banks to grow and flourish, it looks like this working relationship may very well continue – into another one of those idealistic and romantic relationships that we have all come to know and love.