Two packed days have already passed at Money 20/20 Europe in a rainy Copenhagen and the conference has been awash with new ideas and deep discussions on the future of finance. The discussion has been propelled in particular by the impact of FinTech companies in disrupting the traditional financial order which has in turn created a large elephant in the room – what should banks do next?
The stand out contribution to the conference so far has come from Carlos Torres Vila, CEO of BBVA bank. As one of the 50 biggest banks in the world, they are under increasing competition from alternative finance providers able to take business away from them with new approaches to technology and customer service. With so many FinTech companies working within small, specialist segments of the market, the bank is seemingly under threat from all sides.
Often the response for banks is to tweak their service slightly and launch a new marketing campaign. But Carlos Torres Vila recognised that was not enough. He spoke about the need to collaborate with FinTech providers, enhance their customer service and invest heavily in innovative finance. It was a significant recognition that banks are losing out to FinTech providers, a trend that shows no signs of slowing. It’s also a brave approach which at its heart says; if you can’t beat them, work with them.
A key theme at this year’s Money 20/20 Europe is how banks can collaborate to their FinTech rivals to offer a joined up service, harnessing their technology to improve services. At World First we too have seen this following on from our landmark partnership with Virgin Money last year.
Whilst this conference has shown signs of banks waking up the FinTech challenge, there is still work to be done. Recently we carried out research among UK SMEs who make overseas payments and the results don’t make for happy reading for bankers. Over half (52%) of SMEs using a bank say their bank does not understand their business’ FX needs, whilst 9 out of 10 (87%) UK SMEs using a FinTech ‘specialist’ for FX rate their service as better than banks.
Expect more chat and soul searching discussions this week about the role of banks and how they should respond to the FintTch challenge. Answers will be hard to come by, but collaboration rather than competition will become more common as we look to develop new products and solve infrastructure challenges.