Tink: Why the entrant vs incumbent story never added up

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Gone are the days when banks and fintechs battled for the financial services crown. Collaboration is proving to be king, as the relationship between banks and fintechs has evolved significantly. Tink’s UK and Ireland country manager Rafa Plantier takes a look at how banks and fintechs have worked out they’re better together.

A few weeks ago I found myself virtually sitting aside some of the great and good in banking and fintech, for the Innovate Finance and HM Treasury Fintech strategic review. Amongst the chat about Brexit, investor sentiment and access to banking infrastructure, we touched on the rapid transformation facing financial services institutions, and the importance of continuing to foster partnerships between banks and fintechs.

This got me thinking about how much the relationship between banks and fintechs has changed over the last 20 years. Back then, it would have been hard to find a bank willing to sit down with what we call a fintech today. But disruption has increasingly given way to collaboration, moving the industry past the now outdated view that pitted nimble new entrants directly against the big incumbents.

Not just ‘dumb pipes’

Today, banks continue to have the edge when it comes to delivering on the expected transformation of financial services, enjoying a level of consumer trust developed over decades if not centuries. The rise of fintechs turning banks into ‘dumb pipes’ that simply funnel money and data is a fake dichotomy. Yes, fintechs are growing in relevance and value, but leading banks have thriving businesses. Both things can be true at the same time. Now, the interesting thing is that they tend to be true together. Breakthrough fintechs are turning bank partners into higher performing organisations.

Banks matter because they are a fundamental social construct. They are part of our monetary system. Society entrusts them with the power to create money – in fact, they create about 80% of the money in the UK economy. So where banks are headed is of social relevance, and I believe the ‘dumb pipes’ idea is neither accurate of the present nor desirable for the future.

Read the full article here. Find more about Tink here.

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