FinTechs & Tech Giants – Friend or Foe, what banks should know?

In a survey conducted by The Financial Brand, they determined the Top Strategic Priorities for organisations and compared the 2018 and 2019 priorities.


What’s interesting about this survey is that despite the most important strategic priority in 2018 and 2019 being to “Improve the digital experience for consumers”, the priority placed on investing in and/or partnering with alternative FinTech providers is the 2nd lowest in priority, which seems contradictory to the most important strategic imperative.

Furthermore, the strategic prioritisation of “meeting regulatory and compliance specifications” and “improving components of security” is also ranked in the bottom 3, whilst these are essentially non-negotiable needs of financial institutions and needs to be addressed appropriately at all times.

In research conducted by CapGemini in 2018, they focused on the top 10 areas of focus for FinTechs to prioritise in favour of collaboration in the Financial Sector, and largely working with banks.

At the top, is ensuring leadership buy-in which is critical, especially when banks have to evolve from the old-school traditional banking towards the newer, innovative mobile and digital bank.

Prior to the collaboration on the project, it is key to ensure that expectations are clearly aligned, to minimise any potential disappointments down the line. It is also critical to define the ownership of IP, so that this debate is not raised during the collaboration.

Furthermore, cultural fit between the Financial Instution and the FinTech is also key to success, as you need to embark on this digital journey together, which means that both organisations’ teams will be working closely together for at least 2-3 years.

The ultimate success of the collaboration is enabled through good communication and transparency that needs to be consistently managed well, throughout the collaboration and post-implementation through sound SLA and Support Contracts.

FinTech Firms

The Financial Brand’s research included a comparison of the Top 10 Retail Banking trends in 2018, in terms of what was initially projects and what was realised. What is most interesting is that the # 1 top trend focused on “Simplifying the customer journey” that was projected at 61% and realised slightly behind at 57%, was not always appropriately enabled through the digital, technology and FinTech collaboration enablers, since we see variances in projected and realised trends:

  • Expanding digital payment capabilities 26% projected | 29% realised
  • Impact of new competitors (FinTech firms, large tech firms etc.) 10% projected | 27% realised
  • Increasing commitment to innovation 4% projected | 21% realised

The above trends were all underestimated in terms of projections vs. realised.
Whilst, the sector slightly over-estimated Building partnerships between banking and FinTech firms 27% projected | 21% realised

It is therefore more and more critical that the partnerships between Banks and Fintechs
are carefully considered and appropriately enabled where each party has their particular role to play.

Suggestions for banks:

  1. Develop a FinTech framework that rewards innovation
  2. Choose an innovation operating model that connects new ideas to business needs while balancing innovation with risk
  3. Assess the pros and cons of your FinTech engagement strategies
  4. Carefully manage talent and architectural change

Actions for FinTechs:

  1. Articulate a value proposition
  2. Differentiate themselves with regulator prowess
  3. Be prepared and well-networked
  4. Avoid overreaching yourself by building a robust business case

This evolution of the banking landscape and the changing role of the previous traditional bank, proves that the relationship between Banks and FinTechs is critical to enabling the evolution of the Banks, to ensure their future sustainability. Even more so in light of other “newer” threats that are being introduced through Big Tech that could upend Banking.

More big technology companies are offering financial products, creating a challenge for retail banks. There’s already been some moves by these players. The likes of Apple, Google and Samsung already have mature payment and peer-to-peer solutions on offer, so it’s not a stretch at all to imagine them offering current accounts or loans and mortgages in the future.

As FinTechs and other alternative non-traditional players enter and compete in the banking sector, we can observe the upheaval experienced in the industry, as the pace of technology advancement and changing consumer preferences and needs continues to disrupt the current banking landscape. Through this evolution, we see the transition from Banking-as-a-Product to Banking-as-a-Service and ultimately towards Ambient Banking or Banking- as-a-Lifestyle, where ultimately any action that you need to do, that requires a financial transaction, could be enabled through your bank. This is where the role of banks in the future will be to provide their custom-ers with the necessary platform to enable them to participate in any exchange that needs to be enabled through a financial transaction e.g. Transport – fuel, purchase of
train/bus/air tickets, ordering trans-port etc.; Hotel bookings and vaca-tions; vehicle purchasing and rentals; property and real estate; easy digital payment options etc.

Apple Pay is gaining fast on PayPal, both in users and transactions. Apple Pay is now completing nearly 1 billion transactions per month. Apple rolled out Apple Pay to 17 new countries, completing coverage in the European Union. This brings Apple Pay to 47 markets globally. Apple Pay handles in one quarter what Samsung has managed since their launch.

Samsung Pay debuted roughly 3 years ago, to much fanfare, and the Korean tech giant announced that its tap-to-pay service has racked up 1.3 billion transactions worldwide and is now available on six continents thanks to a launch in South Africa at the end of July. That makes it available in 24 markets. While 1.3 billion is large, it’s notable that Apple Pay processed over 1 billion transactions in the second calendar quarter of the year.

It took a few years for mobile wallets to get past the aura of just a “cool technology” looking for a problem to solve, but Google Pay and its peers are clearly finding their niche as a way to embed payments with customer engagement. Google Pay has taken the pole position on the Unified Payments Interface (UPI) platform in terms of value of transactions by a 25% margin.

Amazon Cash allows customers to go to retail locations, load up their Amazon account with cash, and use it to pay for transactions. Amazon has also started lending to some of its smaller merchants.


When you think about the consumer side of things, we’ve seen a number of changes. When we used to ask consumers about who they trusted with their money, whether it was comparing a bank to a FinTech firm or a Big Tech, there was this wide gap between how they felt about those firms’ ability to handle their money versus banks. We’ve now seen that gap narrow significantly.

When you ask consumers how they feel about their bank’s digital channels today, many of them aren’t satisfied. This presents a real threat.

Banks have to be very thoughtful about how they invest to build up these digital channels and how they migrate their customers to use them, because when they do that, they realise a double benefit. They achieve higher NPS, because customers generally rate their bank’s mobile and digital apps higher than they do an in-branch experience, while they’re able to take out the costs. It’s important that banks invest to do this because if not, as we get into players like Amazon, or Google, or other Tech Giants thinking about going deeper into banking, they’re going to face a real threat from their customers who are increasingly dissatisfied with the traditional experience.


Millennials say they would be prepared to use firms like Amazon, Google, Apple and Facebook for their banking services. They are used to the one-click convenience and want it replicated across other services they use.

The company MuleSoft surveyed more than 8,000 people across the world and discovered that 52 per cent of 18 to 34-year-olds say they would consider banking with Facebook or another tech giant they use regularly. And third of all age groups agreed. They said they wanted simplicity and convenience, plus a more personalised service. Despite recent data concerns, it appears we want our banking to be as modern as our Instagram account.

Of course, Tech Giants won’t be able to offer high street banking services, but then for a lot of people, neither do the big banks. A recent survey from Which? found that UK bank branch closures are reaching an “alarming” rate of 60 a month. At the same time, digital-only challenger banks such as Monzo and Starling Bank are growing in popularity, powered by their mobile and tech-first-ways.

On top of that, recent Open Banking regulations allows customers to ask their banks to share financial data with regulated 3rd parties. It’s designed to ensure customers own their data and can share it with firms who will use it to help them manage their finances. That means almost a barrier-free entry into banking for the Tech Giants if they decided to flex their muscles and tackle the sector.

In March 2019, social media giant Facebook officially announced it was going to launch a new payment service through its messenger application. Users can now send friends money through the app for no cost after entering an optional PIN or touch ID for extra layers of protection.

Current Facebook users can link their debit card to the messenger app’s settings section and send mobile peer-to-peer payments to their friends by striking up a conversation. Once two friends engage in dialogue, a “$” icon will appear above the keyboard. All users have to do is enter the amount they wish to transfer and select the pay option.

Facebook payments provide a direct link for your ecommerce business to the consumer. Since their debit card information is already linked to the platform, the payment is seamless and easy to use. Facebook is already a major advertising platform, and now that users can link their payment information to the social media outlet, they can make purchases more quickly and easily than ever before.
Its messenger app was used by 600 million people worldwide.

The social media powerhouse announced plans in June 2019 to launch a block-chain-based financial network and cryptocurrency in 2020 that will allow users to make purchases or transfer funds with just a couple taps on an app. Facebook announced it is creating a fiat-backed cryptocurrency that can be stored in digital wallets and used by consumers and others to transfer funds or make purchases anywhere in the world.

Calibra, Facebook’s digital wallet, will store Libra, Facebook’s digital currency.

A Facebook user would download the Calibra digital wallet application, purchase the Libra digital currency through a financial network, and then perform peer-to-peer digital money transfers through Calibra as a stand-alone app. A user could also do the same thing through Facebook’s most popular communication platforms: WhatsApp and Messenger.