Leading figures call for collaboration between FinTechs and traditional financial services
Leading figures from the financial services and fintech sector across Yorkshire and the North West met to discuss and debate the opportunities, challenges and key themes facing the sector at round table event in partnership with Squire Patton Boggs and KPMG.
With technology acting as the catalyst behind the financial sector’s rapid evolution, the North is becoming even more of a major player for its expertise in financial services.
But as the traditional world tries to adjust and keep up these advancements, whether its conglomerate giants or the SME marketplace, there are obstacles and opportunities faced by businesses in the financial services and fintech sectors.
A group of business leaders working across financial services in Yorkshire debated the challenges caused by the disruption technology has brought to the sector at a round table hosted at KPMG in Leeds.
Paul Grace, head of customer banking at Yorkshire Bank, believes that a major factor in developing the sector is for more traditional banks and financial organisations start to collaborating with fintech companies.
He said: “The banks have to be working in conjunction with the fintechs, not compete against them. We have to collaborate because that’s the way we differentiate ourselves, and that’s how we will gain customers. Any bank who stays as it is now, will not be around for very much longer.”
Michael Atack, director financial services, customers & digital advisory at KPMG, added: “We are now seeing partnering and collaboration more and more, because these partnerships are providing financial services but also going beyond the core of financial services as well.
“For example, Metro Bank who came to the market in 2010, are working with around 13 or 14 fintechs today, showing that they are trying to establish themselves with a very different proposition for customers.”
But there is also a growing concern for organisations either new into this fintech space or which have yet to firmly establish where they stand.
Lorna Allan, director of IT at Hitachi Capital, said: “We are not a bank, we are a lender with a digital background. We are not a fintech right now, so we are in a scenario where we are looking to speed up this change. This starts the debate as to whether we partner with fintechs. We’ve already recognized that broadening services and the convenience fintech provides to customers is really critical to what we actually do.
“So internally we are thinking ‘how do we change our product mindset, how do we think about the customer experience and do we start to draw everything together?’.”
Nick Smith, sales and marketing director at Reward Finance, said: “From an SME lending perspective, if you are a customer looking to get some cash you won’t be able to get it from the big four banks. So as they have stepped out, the alternative finance providers have stepped in, giving us the opportunity to establish ourselves in this space.
“The challenge is turning this into a mainstream opportunity where we can actually get investment and get the customer to buy into the model. But the alternative finance place itself also has to start to make some money in the fintech world. If these organisations face an economic downturn post-Brexit, what happens then? And equally what is the knock-on effect for the supply chain especially with all the customers. I think there is an element of a dot-com bubble brewing in the background.”
This disruptive technology is also changing the way companies interact with their customers.
Rob Pheasley, director and CEO at Marsden Building Society, said: “How do we know what our customers want?
“We decide what technologies we want to employ and what products we want to offer but how do we know? So now we need to put more emphasis on finding out what our customers want and we think technology is the enabler to this.
“Now we still have traditional business models in place. So we still have the branch, but the environment is very very different.That is why the cornerstone of our digital strategy is about understanding the customer.”
Andy Thompson, managing director of Sandstone Technology, said: “Customers are very quick to say if something isn’t right.
Addressing what firms in the sector need to be prepared for, Thompson said:”Be set up for regular change, so organisations and fintech should not be scared of making a mistake or getting something slightly wrong, especially if the right solution is a few weeks away and not a few years.
“Put out a new feature, because this can be quickly changed – the fail fast model.”