R.G. Manabat & Co.
As bank CEOs realize thepressing need to introduce next-generation products and refresh their brands to competefor millennial customers, many are turning to financial technology (fintech) companiesfor solutions. Although strategiesto buy, build, borrow or battlefintech startupscan be effective,banks should also considerdeveloping their own innovationcultures from within, to create alasting competitive advantage.
Banks eye fintech innovation
For some time, banking leadershave understood that competitionis not what it used to be.With product commoditizationwearing down their returns,and public trust in the bankingsystem waning, they appreciatethat they must inject fresh innovationinto their institutionsto generate new sources of value,and fortify themselves against amultiplying field of disruptivecompetitors.
Bank CEOs have urged theirboards to make innovation apriority and, rather than simplyresisting the fledgling newcompetitors through regulatorybattles and pricing wars,they should instead considerworking with, or acquiring, thestartupinnovators to improvetheir competitive footing. Thisviewpoint was reinforced by arecent KPMG publication, FinTech100—Leading Global FinTechInnovators Report," whichobserved that venture capitalinvested is a relevant measureof innovation, which, in turn,fuels enduring competitive advantage.