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By Tom Rich, Business Consultant
Established banks have strength in terms of economies of scale and size both in customers and data. However they really struggle to adapt to change
In the mid 90's Bill Gates famously said that banking is necessary, banks are not. Will this be the end of banking as we know it? Established banks have strength in terms of economies of scale and size both in customers and data. However they really struggle to adapt to change especially in view of technical disruptions often initiated by a FinTech. Will they be able to survive?
In BJSS’ view banks have a future if they radically review their operating models and collaborate with FinTechs rather than seeing them as competition. We believe there are only two ways banks can go.
The alternative model is
Fintech's will play a large part in both models by bringing innovative and disruptive technologies into the banks without having to cater for the legacy infrastructures. However, the real strength lies within the cooperation between banks and FinTechs as both have compatible strengths and weaknesses ie. scale and capital vs nimbleness and innovation. Together they will be able to optimise the value they create for themselves as well as that for their customers.
BJSS believes that traditional banks have a future but they need to decide which end of the two models they intend to play. In both cases it is essential that they are widening their ecosystems and change their culture from being highly competitive to embracing a more collaborative approach and become more nimble and adaptable.