An increasing number of banks are looking for Fintech partners, Finastra reveals

The role of collaboration and partnership in the success of the fintech industry cannot be underestimated. According to surveys commissioned by Finastra, three out of four global banks plan to partner with an average of three fintechs over the next 12 to 18 months. While this means positive news for the industry, the research examines exactly why banks are increasingly turning to fintech.

Finastra received responses from 783 interviewees across 260 banks in the UK, Europe, Middle East, Asia-Pacific and the Americas, as well as 393 interviews with banks and financial institutions in North American community markets.

The financial software provider revealed that the largest proportion of respondents want to connect to a platform with integrated fintech solutions (56 percent). Only six percent of these respondents prefer to build these capabilities in-house. This trend was particularly widespread in Europe, where the figures were 73 percent and five percent respectively.

Some of the most prevalent motivations behind a greater number of banks looking to integrate fintech solutions were:

• Reduce operating costs (46 percent)
• Deployment of new technology with greater ease (43 percent)
• Align more closely with evolving compliance needs (37 percent)

Digital transformation has also been a priority, with global institutions investing an average of $367.6 million in transformation by 2023. European banks are also investing significantly more than this: with an average of $886 million.

But while global respondents say they have digitized 47 percent of their digital processes on average, only 20 percent feel they are ahead in their digital journey, and 54 percent believe they are behind. It also emerged that this feeling is significantly lower in the Middle East, where only 12 percent of those surveyed feel they are ahead – with 62 percent stating that they feel they are behind.

Bank priorities

Finastra research also found that banks are using fintech to improve the customer experience. When searching for a new fintech partner to improve customer offerings, global banks are prioritizing online portals and banking channels (55 percent), transparency across processes, such as providing the customer with real-time updates on onboarding progress (45 percent), and improving end-to- end-to-end connection and value-added services (44 per cent).

Reducing carbon emissions is the primary ESG goal for 49 percent of global banks, followed by board and management coordination on sustainability initiatives (46 percent). This statistic is similar for banks in the Middle East.

In Europe, there is a larger proportion (74 per cent) that prioritizes reduction in carbon emissions, followed by deciding on definitions and concepts (67 per cent). In APAC, the main priorities are securing long-term funding internally (63 per cent) and board and management coordination on sustainability initiatives (61 per cent).

Banks seeking fintech

Isabel FernandezEVP of lending at Finastra, discussed the research results: “In an environment characterized by uncertainty, high inflation, fluctuating interest rates and recession risk, banks are under increasing pressure to reduce operating costs while continuing to improve the way they earn. their customers.

“Our survey shows the recognition by banks that they cannot navigate these waters alone. They are instead choosing to partner with fintechs, with a preference to connect to a platform of integrated fintech solutions, to help them adapt quickly and at the same time reduce costs.

– The research also shows that ESG continues to expand through a bank’s internal operations and external offerings. At Finastra, we champion the idea that finance is open. Either through our open platform for collaboration and innovation – FusionFabric.cloud – or our belief in open technology, mindset and culture, we help banks future-proof their offerings and drive a better future for the communities they serve.”

Martin Smith is global head of market analysis at Øst & Partner, the company that conducted the survey. Smith discussed his views on the revelations surrounding the decisions made by the banks: “Major inflection points in recent years have had, and continue to have, a dramatic impact on how financial services evolve. This forces institutions to rethink how they manage risk, increase their agility and accelerate innovation to evolve with new demands.

“We partnered with Finastra to better understand and show how banks are adapting to this environment. We believe that despite the challenges facing global banks, the industry’s focus on collaboration and driving ESG initiatives forward, highlighted by the research, will ultimately have major benefits for financial institutions and their customers, today and in the future.”