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The present and the future of financial services. This was the underlying theme of the Innomoney event organized by Adigital. The rivalry between fintech startups and digital banking is a reality, but the move toward a “hybrid” business model has been repeated again and again.
By hybrid we mean making the most of the experience and knowledge of banks in terms of financial services and introducing the nature and style of fintech startups to make those services more simple and efficient.
This is how Almudena Román, Managing Director of ING Direct, described it, going on to specify the “opportunities” that are currently opening in the sector. “We are already incorporating fintech and we have opened up because we realize that we cannot do it alone”.
“Banking is already fintech, because it has finance and it has technology”, defended José María Fuster,Managing Director of Innovation at Banco Santander. However, he insisted that the problem is in the business model: “Banks must evolve toward the fintech model by moving from a traditional model toward a more digital one. That is quite possible”, explains Fuster.
Luis M. Cabiedes, investor in Cabiedes & Partners is not quite so convinced, however. In his opinion, fintech startups have a lot to say for themselves and are the ones that are revolutionalizing the sector, in the same way as the digital revolution of other sectors, such as the media and music.
“We haven't done away with the banking sector, but economic history is not on its side, because no sector has survived the digital wave, neither the music industry, nor the retail industry…”.
Philippe Gelis, President of the Spanish Association of Financial Technology took a similar stance. “The future lies in competition but also in cooperation”, although he mentioned that many fintechs focus on “consumers who are not very satisfied” with the services provided by traditional banks and assures that the key is to offer them “more sophisticated” products.
The “fintech bank” of the future is a mixture between current banks and fintechs startups. “It will be created from scratch, will be based on efficiency and will have the customer in mind”, said Gelis. In his opinion, when the second fintech wave catches on, the main channel to relate to banking customers will be digital.
The costumer at the heart of the business
This is why in all of his speeches Gelis has stressed that all financial agents must “enhance the customer experience” in the digital sense, but above all focus on the mobile business.
This particular matter was the highlight of the keynote speech by Almudena Román, from ING Direct.“More than half of any contact with customer is via cell phones” and this is a growing trend.
And the person in charge of the new business mode is the customer, explained Fuster. “Any bank or fintech startup that is unable to provide the service that the customer is looking for will perish”. He pointed out that although the banks of the future in this evolution “are not going to be those that currently exist”, neither will they be the fintech startups.
On the other hand, Cabiedes thinks that it is precisely the user who is helping to push this digital “revolution” forward. “The future is already here and the customer ‘is not going to be king' because he is already king”, the investor stated.
Román pointed out that what we need to do is "think of the customer as the friend whose heart is to be won rather than banks as the enemy to be beaten” in terms of the competitive differences between startups and major institutions.
Simplicity as the standard
Along these lines, Chris Skinner, CEO of Financial Services Club and author of the book Digital Bank, is convinced that simplicity is the way to generate value for the customer amidst this digital transformation of the sector. As a consequence, fintech companies are leading this change.
“You either switch to digital or you can go home”, Skinner warned financial institutions that are stuck in the past. The Internet of Things, blockchain technology...these are the technologies that are allowing a more enhanced interaction with the user and it is at the “core of this transformation” toward bank 3.0.
By BBVA Innovation Center