Capgemini and Efma published World FinTech Report 2020 revealing traditional banks have an opportunity to thrive in today’s market by embracing Open X and becoming Inventive Banks.
(Capgemini’s ‘Open X Readiness Index’ is a global benchmarking tool that measures the readiness of banks to effectively collaborate at scale with startups by measuring their maturity across people, finance, business, and technology pillars.)
This is possible even despite a serious difference between traditional banks on one side and BigTechs and challenger banks on the other.
“Traditional banks are at a critical juncture. They must embrace Open X or risk becoming irrelevant,” said John Berry, CEO of Efma. “In order to keep up with ever-changing customer expectations in today’s marketplace, incumbent banks must transform into Inventive Banks with collaborative support from qualified FinTech partners.”
The study reveals several pain-points:
• Only 21% of banks say their systems are agile enough for collaboration
• Only 6% of banks have achieved the desired ROI from collaboration
• 70% of FinTechs don’t culturally or organizationally see eye-to-eye with their bank partner
• More than 70% of FinTechs say they are frustrated with the incumbent’s process barriers
• Half of FinTech executives say they have not found the right collaborative partner
“The world has changed dramatically over the last couple of months. 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,” comments Anirban Bose, CEO of Capgemini’s financial services and member of the group executive board.
World FinTech Report 2020 claims that for the banks to remain competitive and appeal to consumers, they have to prioritize middle- and back-end transformation through data-driven and customer-centric partnerships with FinTechs.
This will automatically improve front-end. Although overall investment in new IT development (vs. maintenance) increased from 24% in 2016 to 33% in 2019, middle- and back-end operations continue to be based on complex, often manual business processes, leading to a fragmented customer experience.