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The rapid growth of technology and the entry of fintech players into the finance market are indeed having a significant impact on traditional banks. Michael Bellacosa, Head of Global Payments Product Management, Treasury Services at BNY Mellon, discusses how banks are adapting their strategies in response to fintech and digitization, focusing more on client-centric initiatives. The collaboration between banks and fintech startups is reshaping the financial landscape and driving the digitization of banking services.
Fintech, a term that originated in the 21st century, initially referred to technology used in the backend systems of established financial institutions. However, its scope has expanded to include various technological innovations in the financial sector, such as financial literacy, wealth management, lending, fundraising, cryptocurrency, and more. Fintech encompasses a wide range of financial activities, including money transfers, mobile check deposits, online credit applications, crowdfunding, and investment management, often without the need for human assistance. EY's 2017 Fintech Adoption Index indicates that consumers are increasingly utilizing multiple fintech services as part of their daily lives.
The emergence of fintech has forced banks to evolve and adapt their strategies to remain competitive. Embracing fintech innovation has become crucial for banks, considering the disruptive potential it brings, as well as the challenges posed by legacy systems. Many banks have recognized the need for client-centric, modernized solutions and have actively collaborated with fintech startups. Initiatives like open banking platforms, leveraging technologies like blockchain, and investing in digital transformation programs are some examples of how banks are embracing fintech to bring about significant changes in the industry.
For instance, BNY Mellon launched an open banking platform in 2018, aiming to foster collaboration between enterprises, fintech companies, and app developers. The objectives included creating seamless and convenient products and services, leveraging the bank's ABCD charter: AI-enriched app, biometric-enabled branch, context-enhanced customer experience, and data-empowered design. Similarly, Openbank, a subsidiary of Spain's Santander, underwent a transformation from a product-centric to a technology-centric approach, encompassing changes in corporate culture and branding. French banking groups are also investing billions of euros in digital transformation programs to enhance operational efficiency, customer experience, and accelerate their digital overhaul.
In conclusion, fintech represents a new era in the financial world, and banks have recognized the need to adapt and collaborate with fintech startups. This collaboration allows traditional banking systems to coexist with the new digital world, transforming the way financial services are delivered. It is important to note that specific details and initiatives may vary among banks and fintech companies, as the industry is continually evolving.