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Why do ecosystems matter to FinTech?

Categories: FinTech

BankiFi founding partner, Conny Dorrestijn tells us about the importance of FinTechs.

Why do ecosystems matter to FinTech?

As a society we have come to the conclusion that yes we need banks for they have a license structure in which we feel safe and that – however much we might grumble – we trust. However, other niche suppliers hugely enrich our daily lives such as Google, WhatsApp, Booking.com etc., and the same is now required for our financial lives. We want to be seen holistically, not just financially but finance as part of our daily business and private lives. It’s about the goals (people need a house or an office building, the mortgage is merely a means to an end) and that cannot be serviced by banks alone: they are often too slow, the customer request too little or niche and because of history, financial institutions think inside out: what products can I sell? A FinTech ecosystem not only benefits the clients but it also benefits the banks. By working with savvy and agile FinTech firms they can offload very expensive R&D with brand new and often unproven technologies. Those FinTechs become the last mile to the banks’ customers: monetise this and banks cut back on multi-channel duplication cost and can truly focus on their core business – running a secure and operationally excellent bank infrastructure.

Banks provide the infrastructure for FinTechs, while FinTechs provide the banks with new services similar to a market place. What is your opinion about this?

As per above, this is a win-win for all. Banks have a robust, safe and low cost infrastructure with backbone products. FinTechs offer the niche services we like such as lending, foreign exchange, financial planning etc. If you combine those two, and under the new Open Banking framework or PSD2 regulation, banks can use their trust, their customer base to offer these services to them, even if they are not a customer (account holder) of the bank. Banks that ‘get it’ are well positioned to carve out a very substantial segment here.

How do FinTechs offer eCommerce solutions in payments?

Many FinTechs offer eCommerce solutions but mostly all are still based on traditional card products and just offer services around it in a more agile way. The payment service providers should be considered the eCommerce FinTechs here, it becomes interesting when they extend the service line from pure transaction into a more wholesome eCommerce experience. For that they need to do more, but the tools are there: AI turns data into insights, location intelligence for last minute offers, and turning eCommerce on its head getting people to auction off their shopping list to a range of eCommerce players. Examples galore.

What role does a city like Manchester play for the FinTech ecosystem?

Manchester offers above all a superb university landscape for talent besides being a wonderful canal based city like Amsterdam. On top of that, Manchester offers a ‘no-nonsense’ hardworking attitude, which is different from London where it is more glam, expensive and front end based. I personally feel that in the mid and back office we will see some profound developments – like our BankiFi proposition – which require a broad skill set, profound understanding of the banking landscape and a down to earth mentality to crack that slightly harder segment. Manchester is great for that as it is part of the UK, which is seen as the financial heart of Europe. Because of good historical links with Europe and in particular, places like the Netherlands, it is relatively easy to guarantee a good Brexit bridge into Europe.

If you’re attending FinTech Week Silicon Valley, click here to book a meeting with Andrew Toolan, Head of Financial, Professional and Business Services, MIDAS and find out how Manchester, Europe’s top city for business competitiveness, can help you. If you’re not going to FinTech Week Silicon Valley, you can always get in touch with Andrew here.

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