We all hear about the disruption and pressure that fintechs are putting on traditional banking and insurance players, but let’s not overlook the potential value this can bring to our economy.
Frost & Sullivan predicts that fintechs will add $1 billion in new value to the Australian economy by 2020. This powerful prediction reinforces both the agility and innovation fintech hubs are set to pump into the region. In my eyes, this is a massive opportunity for traditional banks to move with this change and turn this disruption into an enabler of digital transformation.
Core technology in banking often dates back more than 30 years, which has inhibited the rapid adoption of new technology innovation. This slow evolution has opened the door for the fintechs that we see today, and the banks are realising the opportunities to work with the disruptors.
The Commonwealth Bank of Australia (CBA) has been recognised for its collaboration with fintechs at the Australian Fintech Awards. The award acknowledges CBA’s collaboration with non-bank small business lender, OnDeck.
ANZ Bank’s CEO, Shayne Elliott, has expressed his interest in developing partnerships with rising fintechs to improve ANZ’s in-house capabilities The recent appointment of a new head of digital further illustrates the emphasis ANZ Bank is putting on developing its ecosystem with FinTechs. I expect details of this strategy will crystallize over the next few months, and it will become apparent how this will support the digital evolution of the ANZ Bank itself.
In his recent visit to Australia and New Zealand, Rob Hetherington, global head of financial services for SAP, commented that to prevent customer churn, banks not only need to provide higher-quality services to their clients, but they must also compete with fintechs and other challengers by leveraging digital technology with the potential of Big Data. Banks need to implement a comprehensive and proactive approach to customer engagement that:
- Combines structured, existing in-house data with unstructured social media analytics to better understand customer purchasing habits, needs, and behaviours.
- Utilizes predictive analytics to anticipate and satisfy customer needs ahead of demand.
- Leverages digital solutions to personalize customer experiences and create seamless engagements for customers
- Creates opportunities to collaborate with non-banking organisations to build joint propositions that appeal to customers’ holistic needs
Guess what – these are the very strategies the fintechs are targeting.
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