Covid-19 is only likely to accelerate the trend towards bank and fintech partnerships although more work needs to be done to make them successful, according to the World Fintech Report 2020 published by technology consultancy CapGemini and financial trade group Efma.
The research found that although banks were looking to leverage new technology and move the business forward, the alliances struck have not been as fruitful or beneficial to the bottom line as expected. Just 6% of banks achieved the desired return on investment from the collaboration while only 21% thought their IT systems were agile enough for collaboration. In addition, cultural and organisational issues hampered progress with 70% of fintechs claiming they did not ‘see eye-to-eye’ with their bank partner while a similar percentage expressed frustration with the incumbent’s process barriers.
Against the backdrop, it is not surprising then that half of senior fintech executives polled in the report said hey had not found the right collaborative partner.
“The world has changed dramatically over the last couple of months,” says Anirban Bose, CEO of Capgemini’s financial services practice. “Businesses will evolve and emerge from the Covid-19 crisis in different and profound ways. For traditional banks, this will translate into an even greater need for digital experience through further collaboration with fintechs.”
The World FinTech Report 2020 is based on research insights from the 2020 Global FinTech Executive Interviews and the Capgemini Open X Readiness Index, a global benchmarking tool that measures the readiness of banks to effectively collaborate at scale with start-ups. It assesses a range of metrics including their maturity across people, finance, business, and technology pillars.
According to the report, the index shows the leading collaborative banks have dedicated and autonomous start-up-partnership team that adopt the well-established fail-fast innovation approach which quickly determines value and cuts losses if something isn’t working. The frontrunners are also early movers that invest in emerging technologies and have little dependency on legacy systems, which makes fintech integration easier.