Finding strength through competition: How banks can turn fintech disruption on its head

Right now, the global payments ecosystem is finding its way through a time of upheaval. Banks are being forced to look at each and every element of how they operate and deliver experiences to their customers in order to compete with fast moving fintech organisations who are increasingly wading into these once calm waters. In 2016, a study by PwC found that top banking executives felt that up to 25% of their business could be under threat from emerging fintech firms, a figure which is increasing year on year. The challenge for banks now lies in not only how to keep up with these nimble adversaries while managing a host of channels which are often governed by different technologies, but how to turn this situation on its head and use it as an opportunity to strengthen their offering, and their market position.

For banks with vision, success lies in the ability to improve customer experiences while meeting and anticipating changing customer needs. By utilising the tools already at their disposal such as an invaluable store of customer information and an established channel network, banks can keep their customer base secure while enhancing their digital banking offering to compete directly with fintechs. Through the effective management of, and innovation through switching, as well as the introduction of convenient and revenue generating services such as cardless remittance systems and Dynamic Currency Conversion, banks can begin to make strides towards overcoming the disruption caused by new market entrants. Then, by enhancing their own digital offering and seriously thinking omnichannel, banks can not only retain their market share, but significantly improve their customer satisfaction and market position in the face of stiff competition.

ATM innovation for survival

With global investment in fintech ventures tripling to $12.21 billion in 2014, before a bank begins looking at developing their digital banking offering to rival that of these competitors, it is important that they first look at managing the efficiency of their workhorse systems such as their ATM network. Any bank trying to make the most of their switching opportunities needs to ensure that they are employing a solution which is capable of not only quickly and accurately routing local and international transactions, but also providing advanced services and routing from numerous devices such as kiosk, mobile and internet payment. A solution such as CR2’s BankWorld will allow your bank to run a reliable, secure switch and take full advantage of the capabilities and services constantly being unveiled across the digital channels. As speed is also hugely important when competing with agile newcomers, an adaptive switching system which allows your team to manage the entire process independently and in-house can give your bank a clear advantage over fintech competition. What is important for banks to remember here is that their integrated self-service network is often their most powerful asset, as with it, they have the power to leverage channels which are not available to fintech competitors. Why stop at allowing customers to transfer money to a friend via mobile when a bank can take this one step further and allow the money to be withdrawn at a nearby ATM machine, simply.

It is also important to bear in mind that modern switching solutions such as BankWorld offer so much more than simple transaction routing and payment processing. One such example is Dynamic Currency Conversion. DCC is a mutually beneficial service which allows banks to make themselves the beneficiary of foreign exchange transactions while also offering customers a convenient way of conducting transactions when abroad. By offering a value-added service such as DCC, banks are not only putting themselves in a position to generate additional revenue, but also providing a valued service to customers. Another prime example is Money Vouchers, a form of electronic cheque that allows banks to offer convenient money transfer services to their customers. They are easy to use, password protected, the transfer is instantaneous and with international migrants remitting over $550bn in 2015 alone, the opportunities for banks to generate revenue and provide a cost effective alternative for their customers really are endless.

Thinking digital to meet the competition

A recent Accenture survey of senior industry executives revealed that 72% of those questioned feel their bank has only a fragmented or opportunistic strategy to dealing within digital innovation. Embracing payments and banking technology is truly the golden rule for banks facing stiff competition from fintechs and should be a cornerstone of any banks strategy. Offering a mobile and internet banking solution such as CR2’s BankWorld Mobile, BankWorld Mobile App and BankWorld Internet which is convenient and up-to-date, providing services such as PFM, P2P transfers, Card on/off, segmentation and instant loans, is exactly what modern banking customers expect and can often prevent them switching to a fintech competitor.

While taking advantage of the digital channels to appeal to tech savvy modern banking customers, banks also have the opportunity to look at how to make these channels work for them. With advanced segmentation and personalisation capabilities, solutions such as BankWorld facilitate the integration of both original and new channels, presenting customers with actionable adverts, products and services which they can choose and receive instantly, regardless of how they choose to bank. This extension of the digital channels and their integration with the physical channels is by definition the real defining factor in how banks can stay ahead of fintech competition.

Exceeding expectations with omnichannel

With global investment in financial technology ventures tripling to $12.21 billion in 2014, a clear signal is being seen within the financial services sector that a new era has arrived. The final strand in creating a differentiated experience is to offer customers something special, something unique, something which fintechs cannot, a truly omnichannel experience. By marrying the digital and physical channels through a solution such as BankWorld Omnichannel, banks will be able to present a seamless experience to their customers regardless of how they choose to bank. By successfully utilising customer data and creating unique, personalised experiences across all channels, banks can not only generate revenue through cross selling and up selling opportunities which are actionable right there on the self-service channels, but also reduce costs and delight customers.

When it comes to competing with fintech competition in fast growing markets, banks today need to look beyond asking how they can compete and retain their market share, but look forward and address how these agile competitors can force them to re-evaluate how they do business and to utilise each and every channel at their disposal to compete, and to succeed.