Recent headlines report bank branches closing at a record pace. While 2020 certainly saw an unprecedented surge of bank closures, it’s also true that the state of banking innovation has never been stronger. Some branch closings may be inevitable due to pandemic-driven consumer behavior changes. Even so, banks prioritizing innovation are better positioned to retain customers while expanding their footprint, bringing more into the fold.
At The Venture Center, we work with thousands of bankers and financial services leaders as well as hundreds of financial technology entrepreneurs every year. Digitization will continue to escalate exponentially, and connecting bankers and entrepreneurs will help bridge the gap between traditional banking and the digital environment to provide a better customer experience.
Innovators embracing the emerging partnerships with fintech companies are successfully navigating today’s changes, but even more, they are helping to define the future of banking altogether. During the last few accelerator programs at The Venture Center, we’ve seen notable trends as banking-fintech collaboration deepens. These innovative solutions and partnerships help banks thrive through the digital revolution and serve their communities better, even those experiencing changes like closing branches.
To ponder digital trends, what’s new today and what’s to come, let’s begin with what we know now. We know that consumers want to do business with the people closest to them, the people they know and see daily. Their banker may also happen to be a little league coach or a neighbor they see out shopping. Whoever the banker is, the bond matters.
We know that those relationships generate that intangible yet invaluable key performance indicator: trust. And when that trust is protected with intentionality and care, the results are immeasurable.
And we know that keeping personal customer relationships intact is critical while also providing customers a sophisticated digital experience. Fintech partnerships offer the fastest path to this balance. To that end, here are the developing fintech trends we see in our field:
► Many emerging companies are based on expanding the availability of wealth-building, life-bettering loans. Loans for cars to get to work, for a small business that needs a little extra cash to achieve liftoff, and home loans that provide stability and generate equity are often out of reach for the underbanked and others considered “credit invisible.” But today, bank-fintech partnerships are providing loans to more people who qualify through social media scores, or who have been de-risked through platforms that strip unconscious bias from scoring. More people are getting the loans they need via these partnerships.
► Another high-tech area bringing in more consumers is financial health and wellness fintech platforms. People use apps to save money and track expenses, manage sharing between family members, and set and meet financial goals.
Many banks are leveraging these tools and packing a big punch for customers. The effort signals that banks care, and customers get financial education from their most trusted financial advisors — their bankers!
► Finally, cybersecurity is a surging bank-fintech partnership model. As more banking is done online, sophisticated hackers and bad actors are taking advantage of more system weaknesses. Cybersecurity advancements by fintech entrepreneurs range from data analysis and fraud detection to the gamification of behavioral changes for bank employees on the front lines in the ongoing cybersecurity war. Banks deploying advanced cybersecurity measures are already several steps ahead in protecting their customers’ money and data.
Customer behavior and the rapid trend towards all things digital have unequivocally reshaped the way banks need to operate. From brick-and-mortar services to security measures, now is the time for banks to seize on opportunities with fintech partnerships. For banks who have not built innovation into their strategy, it’s not too late — but the time to act is now.
By leveraging fintech partnerships as part of an overall innovation strategy, banks and consumers will continue to thrive for generations to come.