March 20, 2020
The continuous evolution of FinTech and the push toward innovative technology solutions within the financial industry in the last decade-plus have opened new possibilities in the world of finance. FinTech has also left many traditional financial institutions lagging behind, wondering where to even begin the process of modernizing their systems. This can be even more of a challenge for small and mid-size community banks and lending institutions that don’t have the resources to consider buying out a FinTech startup or overhauling their internal operations.
Having worked at a regional bank implementing a “digital transformation,” and interacting with many more banks and credit unions every day in my role as Director for the Banking & Lending Practice here at Fortimize, I recognize the challenges, pitfalls, and possibilities.
Traditional financial institutions are burdened by complex regulatory and security requirements. There are every day operational needs to manage plus years of accumulated industry conventions and legacy technology. The reality of the challenges that most traditional financial institutions face would seem to amply justify a lack of progress toward technological innovation.
The dramatic surge and success of FinTech aren’t all about the tech. Think about the craft beer revolution or “third wave” coffee. The product being produced by independent brewers and roasters was definitely a radical shift away from what was available on the market from the larger “corporate” producers. Yet the incredible pace of growth was made possible by a number of factors, including changes in culture, technology, market competition, and deregulation.
Ultimately, changes in social norms sparked demand, but also grew around and adapted to the product, driving growth exponentially. It wasn’t just that people had access to a wider range of pilsners or IPAs or exotic new roasts. Brewpubs and coffee shops created a different social space built around hospitality and a shared experience of the craft.
FinTech has disrupted the financial industry with innovative solutions that provide fast, efficient, and convenient alternatives to traditional financial products and services. While it is tempting to place the emphasis on technological innovation, though, it is important to consider what FinTech has really done for the industry. It has shifted the consumer narrative through technology, and beyond technology.
We all want experiences with the products and services we use every day to enable us to live the lives we envision for ourselves. Financial consumers will naturally utilize those products and services they feel allow them to take an active role in shaping their view of their own financial lives.
Success in the new digital landscape won’t come only from a simple switch to a new app or technology, or a ground-up overhaul of an entire operational infrastructure. The future requires a shift from a product focus to a customer-centric view; a move away from a reactive approach to business to innovation driven by offering customers a real-time, dynamic view of their financial life.
Managing the customer experience is key for most smaller banks and lending institutions. Yet also key is deciding where and how the “local” institution can stay relevant in its niche. Creating customer loyalty is possible, and chances are your people are trying to do it—they just don’t have the resources aligned to enable them to do it efficiently. Core service providers don’t have to hold back operations. Third-party FinTech providers don’t have to be the enemy—they can become valuable assets.
If your organization is ready to change the narrative of your customers’ experience for the better, Fortimize can help you develop a strategic roadmap towards implementing the right solution for your business. Right from where you are, in a way that makes sense.
During times of uncertainty and continuous change, disrupting the status quo can be daunting. Know you’re not alone in this. With a trustworthy partner and the right approach, it can be easier than you think.