Fintech: the changing face of banking
In the financial services sector, there is an indisputable need to adapt to the fast pace of the rapidly changing fintech environment – and banks are rising to approach this as a challenge. The danger, otherwise, is being overtaken by digital disruptors.
Many firms are scrambling to catch up, buying up fintech start-ups by the dozen. No bank wants to be the Nokia of financial services: a trustworthy staple overtaken by the gleaming simplicity of Apple.
Mark Carney, the Governor of the Bank of England, is encouraging financial services to engage with fintech innovation. In a move to combine the power of long-standing financial institutions with the dynamism of new technology, the Bank has set up a FinTech Accelerator.
The Accelerator offers a way of partnering with financial technology start-ups for the Bank to enhance knowledge and develop new ways of carrying out its operations. As the face of the industry changes, banks are stepping up the pace to meet customer demand.
The generation who have grown up with Google are ‘digital natives’, soon to reach adulthood. They’ll expect a totally different banking experience than the generations before them – Apple Pay and contactless cards are just the beginning.
HSBC, one of the fintech frontrunners, has introduced voice biometrics for customers, allowing them access to their accounts with a verbal phrase that is recognised by sophisticated voice recognition software. And there is increasing demand for smartphone-based banking, like Barclays’ latest innovation for mobile phones – using your smartphone for contactless cash withdrawals at ATMs.
But in the middle of the excitement around fintech, there are stumbling blocks too. In our work with financial services businesses, we’ve seen the difficulty of implementing new technology with banks’ legacy systems. Migrating data from legacy infrastructure to new fintech platforms isn’t simply a matter of pressing a button. It’s hard for banks to catch up when they’re facing digital firms who start from scratch, without the cumbersome legacy of outdated systems dragging them down.
All this talk of technology misses the human story too. With increasing automation and the democratisation of technology, footfall in bank branches is falling. Why go to all the time and trouble of going to speak to a bank employee in-person when it takes seconds to do the same transaction on your phone?
Customer satisfaction rates may be soaring, but that does little to reassure employees who could face the possibility of losing their job due to increasingly sophisticated automation. An Oxford University report forecasts that “about 47 percent of total US employment is at risk” from jobs that can be automated.
This is happening now; the new age is already upon us and jobs are being taken over by computerisation – in 2014, Lloyds Bank announced 9,000 job losses ‘to aid digitalisation’. The challenge, then, is in how to keep up employee morale and engagement even as their future looks uncertain.