Why collaboration, not competition is the key to improved financial services

Why collaboration, not competition is the key to improved financial services

The financial services industry – banks, mobile network operators, insurance providers and others — have historically sought to work independently in achieving their profitability goals.

With the recent global and regional influx of Fintechs — companies that leverage technology and innovation to compete in the financial services marketplace — this industry is getting significantly more competitive.

Working collaboratively with fintechs, these bigger and more traditional financial service providers stand to improve their ability to respond to established and emerging challenges to growing their customer numbers and improving their bottomline performance. Two key barriers limit this collaborative effort. Firstly, financial service providers (FSPs) have long invested significantly in technology (like core banking systems), distribution (like physical branches) and people (through extensive training).

Finance officers and executives world over are expected to ensure a return on these investments within a reasonable timeframe. In many instances, the value of these investments may not yet have been fully realised. Partnering with fintech players often calls for a significant writeoff of these assets, and sometimes involves even further cost outlays including newer technology and staff retraining. Further, the limited understanding of FSPs’ key value-drivers by fintechs (and vice versa) presents some challenges to partnerships.

Banks and insurers are substantially fixated on ensuring regulatory compliance and better risk management to deliver customer confidence. Fintechs, however, thrive on the flexibility of fast-changing environments — sometimes with poor or non-existent regulation — to attract investment for innovation and extremely fast customer acquisition.

These realities are reflected in the […]

Full article at www.newvision.co.ug

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