How banks can benefit from fintech-fuelled changes

Lindsay James
Lindsay James
By Lindsay James on 12 October 2015
How banks can benefit from fintech-fuelled changes

The new report 'Innovation in Payments: The Future is Fintech' hones in on the growing influence of fintech in transaction banking. It assesses the direct and indirect impact of the new technology on payments and the way in which it is moulding client behaviour and fuelling expectations for better, faster and more innovative solutions across the payments spectrum.

“The fintech era is upon us and banks shouldn't merely be mindful of this; they should also have a clear strategy in place in order to adapt to and benefit from fintech-fuelled changes,” said Ian Stewart, CEO of BNY Mellon’s Treasury Services business. “While the banking industry is traditionally conservative about change, any hesitation or ambivalence here could be costly. In order to position themselves at the centre of the payments industry of tomorrow, banks must act today to understand, interact with, and cherry-pick from the full smorgasbord of fintech developments.”

Cutting-edge technology holds great potential to transform how consumers and clients initiate and process transactions. It’s no longer just a case of new currencies or faster payment methods, but an entire rethinking of how transfers of any value might be undertaken. More fintechs are graduating from the ranks of start-ups to multi-billion dollar listed companies: at least 4,000 fintech start-ups are active and global investment in fintech ventures tripled in 2014 to US$12 billion.

While regulation has put pressure on bank resources, banks must prioritise technology-focused strategies. The financial services industry has one of the highest ratios of IT spend as a proportion of revenue, with levels expected to reach US$197 billion in 2015. That said, over three quarters of this is estimated to be in maintenance rather than new services, so banks need to redress this imbalance. The report examines what strategies banks should adopt in order to understand and access these exciting fintech-fuelled developments, and thereby future-proof their long-held position at the heart of global payments.

 

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