2023 Fintech and Financing Conference & Expo

BNY Mellon: Collaboration Between Banks and Fintechs Key to Avoid Client Disintermediation

BNY Mellon | Oct 10, 2022

The forces disrupting payments - BNY Mellon:  Collaboration Between Banks and Fintechs Key to Avoid Client DisintermediationBNY Mellon, in collaboration with Aite-Novarica Group, today released a report finding that financial institutions (FIs) servicing business clients are being disintermediated by fintech payment providers. But it also found that banks are slowing the trend by partnering with larger banks who have already built connections to fintechs.

  • Survey: The findings of the report – produced in collaboration with Aite – are based on feedback from a survey of 790 employees of midsized and large organizations in seven North American and European countries.
  • Innovation lag spurs disintermediation: With today’s capital constraints, regulatory burdens and cost pressures, it can be challenging for financial institutions (FIs) to  keep up with the pace of change and abundance of choice in payments. Because of this lag, businesses can sometimes be enticed to circumvent their banks by engaging directly with fintechs to solve for points of friction in the payments process.

See:  Canada’s Open Banking Journey: Interview with Huw Davies, Chief Commercial Officer OZONE API (UK)

  • Collaboration enables opportunities:  This so-called “disintermediation” is amping up the sense of competition between FIs and fintechs, but also enabling many opportunities for innovation and  operation between them — with both sides having much to gain.  The potential for collaboration is driving a surge in innovation as the industry races to meet new end-user demands. The future of payments should see a lot more synergies between banks and fintechs as they collaborate on new ways to drive growth.
  • In this research, several supporting trends have been identified:
    • Qualitiative:
      • Many FIs are modifying their strategy roadmaps to partner and collaborate with fintechs to bring better, more robust capabilities to market quicker than they could by utilizing only internal resources and development teams.
      • Overall, businesses report that they would actually rather partner with an FI than have to seek other third-party fintech providers.
    • Some 62% of businesses are already working with a fintech provider and 28% are working with multiple fintech providers.
    • Only 34% of businesses feel that their FI fully understands their needs when it  comes to payments. This represents a large opportunity for FIs to invest and differentiate to meet the individual needs of their end clients, including by partnering up with other banks or purchasing white-labeled solutions.

 See:  UK banks publish fintech collaboration toolkit

  • Almost 60% of businesses report that the speed of payment and settlement is the biggest gap in their current payment strategy.
  • An overwhelming 88% of businesses have already made a significant investment in improving their payment technologies or processes, and this number is expected to remain high.

View the original release --> here

Download the 13 page PDF report --> here


NCFA Jan 2018 resize - BNY Mellon:  Collaboration Between Banks and Fintechs Key to Avoid Client DisintermediationThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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