Banks will prioritise tech, data and new partnerships this year
Currently, 58% of banking leaders are not actively partnering with fintechs, regtechs or other startups.
Currently, 58% of banking leaders are not actively partnering with fintechs, regtechs or other startups.Over the coming 12 months, 37% of Australian banking leaders are looking to invest in business transformation and technology and 33% are planning to invest in digital offerings and data. One in five banking leaders say they'll be investing in new alliance partnerships over the coming year, to gain more market share and compete globally.
These findings come from a new Banking Industry Report released today by technology provider TAS, which spoke to senior Australian banking executives to analyse their thoughts and priorities for the year ahead. Unsurprisingly, one in three banking leaders are concerned about the impact of new players in the market due to the rise of fintech startups vying for a slice of the sector. However despite this concern, 58% of banking leaders are not yet partnering with fintechs or regtechs.
New fintechs are popping up threatening to steal customers away from the banks with their shiny new tech and flawless mobile apps, for example the digital neobanks Xinja and Volt. In June, new digital bank 86 400 announced it will launch to the public early next year, and openly aims to be a direct competitor to the Big Four banks NAB, Westpac, CommBank and ANZ.
But not all fintechs are competing with the traditional banks. In fact, it's often quite the opposite with many wanting to work with the banks to enhance their existing offerings. In January personal finance app Pocketbook became the first Australian fintech organisation to connect with Macquarie Bank's new open banking and data sharing platform. The platform will allow Macquarie Bank customers to add their bank account details to their Pocketbook app and manage their finances seamlessly within the app.
CEO of TAS Shane Baker said, “Australia’s banking industry is at a crucial point in its history, which is being driven heavily by disruptive technology and innovation, as well as getting some of the basics wrong like customer service and loyalty. Bankers are genuinely concerned about the long-lasting effect of the Royal Commission and how best to carve out competitive opportunities in the aftermath of these revelations, but also how to gain back customer trust.
“In the year ahead, the industry will go through a cycle of change that will showcase the strength and resilience of incumbents who are willing to adapt to change and collaborate with the right partners to enhance their resilience in the market, but we’ll also see the effects of open banking and how the newcomers like neobanks, FinTechs and international players will be taking a foothold in the sector like never before.”
Whether they want to collaborate with fintechs or not, it looks like these new players are here to stay and the banks might need to hop on board or risk losing customers, particularly younger customers, for good.
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