More traditional banks choose to collaborate with disruptive fin-tech firms

The superfast growing fin-tech industry is one that has been considered disruptive to the traditional banking sector. However, with demand for the services younger FinTech ‘disruptors’ offer proving popular, more traditional, older banks are adopting a new outlook on the young financial services entrants.

Collaboration between FinTech disruptors and well-known banks and finance firms has become a fast-growing trend – and its one Chairman and Founder of private equity firm Finstar Financial Group, Oleg Boyko has been anticipating Bank – Fintech partnerships. 

During 2018 Boyko shared his views that collaboration between traditional banks and the FinTech industry would offer the best outcome for everyone; older banks with entrenched methods could incorporate new technology to become more inclusive and acceptable to millennials expectations. And vice versa global fintech companies are in need of traditional banks; the younger start-ups improve their reputation among older bank users, gain entrance into a proven regulatory environment and also learn some important lessons from banks for whom that experience was often hard won!

Boyko’s business supports FinTech technologies 

International businessman Boyko isn’t just vocal in his support of the startup FinTech industry. In 2017 his company Finstar Financial Group announced a $150 million 5-year plan for investment in new FinTech startups and its own in-house research and development of financial technology.

In an interview with FSTech, finance-focused Oleg Boyko outlined details of the kind of FinTech startups the fund would be interested in.

“Finstar will maintain its focus on transformational financial services platforms and businesses. We will look more broadly at our investment thesis and aside from the core focus on FinTech and InsureTech, we will also seek FinTech-enabling models within realms of AI, data science, AdTech and MarTech,” Boyko said.

Finstar’s Chairman Oleg Boyko’s bank and Fintech startups interest is clear and its evident more well-known businessmen are in agreement with him. In addition to that, more financial services firms are also highlighting their positive view on collaboration between the two elements of the same industry, in line with Boyko.

In December 2018, Deutsche Bank’s Head of Cash Management Americas and Global Head of Digital Products, David Watson, told PYMNTS.com that the main issue is identifying the best way to give customers what they want and need.

“The key to successful product development lies in the definition of the market problem. A successful product is always a solution you designed to address that market problem,” Watson said. He added that some FinTech, AI startups could be used as enablers for firms like Deutsche Bank to provide more inclusive services to a broader range of potential customers.

That’s in line with Oleg Boyko’s business view of how and why FinTech startups and traditional banks should collaborate.

Bank and FinTech collaborations

Support for closer working relationships between the two different aspects of the financial services industry has grown to such an extent, that a flurry of agreements and partnerships between FinTech startups and traditional banks have emerged. This increased level of partnerships and collaborations between the two spectrums of the same sector, is exactly what businessman Boyko told Medici would happen.

In the UK, digital-only bank Starling has agreed on a deal with the Post Office, where it will gain a physical, in-store presence at some existing Post Office locations.

United Overseas Bank, (UOB), agreed on a number of FinTech partnerships during 2018 with companies including E-Wallet Razer Pay and AI provider Personetics. Elsewhere, Morgan Stanley said it has streamlined the process by which it can agree on partnerships and deals with startups.

While the fruits of the more recent agreements will take time to become clear, VISA Europe, who embraced the FinTech startup deal pathway in 2017, can bear witness to the potential for success when financial services companies collaborate.

Klarna was founded in Sweden in 2005, can name VISA as one of its partners and is now a well-known bank in Europe, providing direct payment solutions across 14 countries.

Giving more potential customers viable banking options

For many years, well-known traditional banks found it difficult to give the unbanked the financial services they required. Thanks to the advent of new solutions, often via disruptive FinTech startups, the number of people without a bank account, or current access to financial services, has fallen to 1.7 billion. That means 69% of adults, now have the financial access and support they need, up from 62% in 2014, according to the Global Findex database.Despite that, some 31% of adults globally still don’t have that banking access that many of them would like.

Investor Oleg Boyko, agrees, stating that the current financial revolution will result in easier and more affordable financial services options to even more people around the world.

 “Financial services will be … an infinitely better, smoother, more convenient experience for customers,” he told FSTech.

That has to be the goal for everyone with a place in the financial services industry. Not only because by providing the right services in the most secure and convenient way will help banks attract more customers, but also because standing still while technology evolves by so much, simply isn’t an option for any finance firm who wants to remain relevant, in business and profitable.

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