Financial Technology is it a hype and just passing by? Banks are doing their best to keep up with the pace and so far are able to keep the customer satisfied; but will they be able to meet the pace of changes initiated by FintTech?
Banks are busy with their internet and their apps are already present in the war for customers choice. So far they are doing well. We don’t see customers move away or new internet banks successfully stepping in. The KNAB-bank and MoneyYou are still small, Bunq is starting up and you can share paying the bill in restaurants or transfer some money after selling something to me or you, using IDeal, nice but nothing special and still depending on “old” payment systems. Real banking for FinTech is still far away because when you fully want to service your customers as a bank you need a banking license with all the new work that comes along, like regulations, the national bank (DNB) Financial authorities (AFM), RISK-management and so on, this requires a special organisation like a bank so we are back where we started and this is not what the FinTech like Google, Apple, bol.com and so on want. Not yet.
So what’s left. Of course large FinTechs with lots of data about customers can start something like banking, possibly first only on a small scale like ApplePay or starting a cooperation with a bank is an option. Parties have discussed this in the past but so far no results.
Banks with knowledge of customers behaviour are legally not allowed to use this data for commercial activities. In the past banks have been criticised for this (ING). Maybe we should reconsider this? Fintech like Facebook, Apple do this already so why don’t we allow banks to do the same?
At the moment the large FinTechs are doing cross-selling easily and offer customers all kinds of stuff they might need (or not). Banks do some cross-selling but only between own products.
Fintech without a large customer base will have a hard time starting up a business with only banking functionality like payments, saving and lending. Just criticising the bank is not enough, the customer might agree but will not move over to you just because of some criticism. Nowadays customers still feel comfortable with their own and old bank. As a FinTech you will always need a solid back-up as a financial organisation that’s steady as a house.
So FinTech can do some additional banking when you have a good product like payments and a customer base of your own. New or additional banking functionality introduced by new FinTech can and will be easily copied by the banks, so they keep their customers happy and out of the FinTech corner?