Banks responding to FinTechs in the Digital Era

Over the past two decades, banks have faced increasing competition, scrutiny, and potential disintermediation. Today, FinTechs are disrupting traditional business models with customer-focused value propositions and pose a direct risk to the banks’ revenue streams. In direct response, banks have elected to either emulate, collaborate with, or buy FinTechs. These strategies enable banks to be fast to market, reach new segments, change culture, manage risk and minimise disruption by FinTechs. This qualitative study draws on the literature and data obtained from semi-structured interviews with managers in banks, FinTechs and consultancies to explore the topic. Findings indicate that there is a disconnect between the original intent for bank and FinTech engagement, and the actual outcome. Much of this “disconnect” can be attributed to technology, organisational and social forces, which often result in longer than expected implementation timelines. We present a framework for bank-FinTech engagement that adjusts as the engagement scales