Should Banks Behave More Like Fintech Companies?

Should Banks Model Themselves after Fintech Companies?

Look at any financial publication today, print or media, and the pages are filled with the latest in Fintech innovations. There is no doubt, that Fintech has rocked the financial world. Does this mean that banks should model themselves after Fintech companies?

This question was the main topic of discussion at CB Insights’ most recent Future of Fintech Conference. There was consensus that there is a lot to the Fintech revolution that banks should take note of, but all agreed banks should not emulate the Fintech personality when it comes to innovating. The majority opinion expressed by the Conference speakers was that banks should continue to do what they have always done—provide the best quality of services to their banking customers.

Innovate but not Emulate Fintech companies have disrupted the financial marketplace and they have a personality to match. The “fail to succeed” motto works for fintech founders. Banks, however, have a historic reputation for being stable financial institutions that customers can trust.

Cathy Bessant who is chief technology and operations officer at Bank of America stressed this point. She says that while banks must not ignore technology, especially since the consumer market is very tech-savvy, the attitude of fintech innovators is not something banks should employ. She said doing so would not be appreciated by customers or shareholders.

Technology to Improve Services Bessant went on to state that banks have a unique opportunity to create their own technology innovations that are in line with their business model and practices. Bank of America, she noted, has not ignored the importance of technology development. They lead the banking industry in terms of the number of technology patent applications. Bank of America’s virtual assistant, Erica, she said is a good example of how a bank can incorporate artificial intelligence technology to better serve its customer base.

Halwit Talwar, who manages the Marcus Division at Goldman Sachs expressed a similar sentiment. He said that while Goldman Sachs is not interested in shifting from its mission, it is capitalizing on technologies that will improve service delivery. Its online loan platform, Marcus was developed to address deficiencies in the credit industry.