In theory, banks could be technology leaders. After all, they have access to the same hardware, programming talent, and resources as do fintechs. But it’s simply not in the culture or DNA of banks—or longtime bankers, for that matter—to lead that type of change. The question is, can banks think like a fintech?
Fintechs are built on a culture of customer engagement, not technology. Technology is just the tool. That’s why most fintechs are not being driven by legacy bankers. If you see banking as the way banking has always been done, you’re not going to have the mindset to be able to deploy technology in a new and different way.
Human nature is difficult to change, especially if there is no pain point to drive it. While the banking industry continues to be warned by industry analysts about the need for digital transformation, banks haven’t yet felt enough pain from maintaining their old ways. Banking is still very much a transactional institution focusing more on selling products and services instead of providing that transformational customer and user experience.
Banks are still making great revenues, and they’re doing it with the same leadership and processes that have been in place for decades. When it comes to digital transformation, bankers are unable to get out of their own way.
For example, take two conflicting survey responses from the most recent Digital Banking Report. In one response, 70% of financial institutions say they have a digital account opening process. However, later in the survey, more than 70% say they require a person to come into the branch to complete the process. That means their perspective of what is digital is not aligned with what customers think is digital.
I see two types of banks that are bucking tradition and embracing technology. In the research I’ve done, I’ve found that the very largest banks are doing well in implementing technology because they have the resources. I also see the very smallest banks and credit unions doing well because they are closer to their customers. It’s that vast middle segment of banks that are driven by legacy cultures, outdated banking systems, and models that aren’t able to react to today’s marketplace realities.
To survive and thrive, these banks will need a total dedication to the customer experience that is found in partnering with fintechs. While collaboration with fintechs will certainly be a part of the answer, much of today’s fintech/banking collaboration is like mixing oil and water. They’re coming from such different starting points and trying to solve such different challenges. Customers today value speed and simplicity. Being a ‘fast follower’ is no longer a viable strategy. Consumers want to partner with innovation leaders they trust. For banks to keep up, they are going to need to start thinking more like technology companies and less like banks.
What Are the Experts Saying?
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