The future of digital ecosystems in the fintech space
Fintech is growing at an incredible rate as the pandemic has accelerated the growth of the industry.
According to data collected by market research firm Toptal Finance, the global financial technology market was worth $ 127.66 billion in 2018, with an expected annual growth rate of 25% through 2022, to reach 309. 98 billion dollars.
However, the Bank of England recently released a report which found that some fintech sectors grew by 40% over the duration of 2020 and a recent poll by Whitelane Research and PA consulting showed that 33% of UK companies surveyed in their report plan to increase their outsourcing in the next 12 months.
Digital and fintech partnerships
The growth rate of fintech companies is the main driver of the partnership ecosystem, according to Michel donald, founder and chairman of the board of directors of Image without remuneration.
He explains, “I think virtual partners have become a staple in fintech because the industry is changing so fast, and a partner that was right for you last year might not be right for you the next year. To adapt, change and evolve at their own pace, a virtual partner actually becomes something that is there in the right place at the right time, but potentially not there forever.
The flexibility offered by digital partnerships allows fintechs to outsource a range of technical and process-related services. They can be anything from cybersecurity and payment solution providers to marketing and website development, cloudification and IT.
Donald points out that because businesses are no longer confined to the confines of their buildings and access to online solutions is so good, contracting has become an essential part of managing business, he points out. .
“It becomes a flexible way of working, where tasks can start in South America in the afternoon and end in Australia the next day, and you can follow a 24/7 sun-like approach, all by being a small startup. “
It creates customer focus
An essential part of any successful fintech, customer focus requires the latest technologies and innovations for businesses to stay competitive. Frank Uittenbogaard, Regional Vice President, Europe, Rear base, explains: “For most financial institutions, their attention must remain on the heart of their business: their customers.
He says that to maintain this focus, while also keeping up with the competition in digitization and innovation, digital partners are essential. “Managed hosted platform offerings like Backbase-as-a-service are definitely the way to go,” he says.
“This means that financial institutions don’t have to do everything themselves, allowing them to focus on their customers, while ensuring the critical speed of innovation required in today’s landscape. “
As platforms are all about orchestrating value and centering experiences around the customer, there has been a fundamental shift in how users interact with their service providers, says Uittenbogaard, who believes the shift has changed business. long term things.
“There is no turning back – and that includes banking providers. Financial institutions will only survive if they adopt this strategy. And if they need speed, the only way to go is to partner with a digital vendor to take this platform-based approach.
COVID-19 and digital partners
Another driver of the digital partnership ecosystem is the pandemic, which has forced the accelerated digitization of businesses and changed the mindset of businesses on its axis. Working with and outsourcing to a company that operates in another time zone could have, in early 2020, been an emergency measure. But now that mindset has changed the way businesses operate and grow.
“Virtual partners in different parts of the world contribute to scalability, not only at the start, but as the organization matures, ”says Donald, using Image N Pay’s experience with contract outsourcing as an example. .
“We use a legal company as a virtual partner. As one of the best QCs in the country, he will always be part of our business model. We use different organizations such as EPAM, which are global and a $ 24 billion company, although all of their employees work virtually, and I have never met them in the two years I have been working with them.
Holders and virtual partnerships
As technology and digital transformation change the way all businesses operate, larger companies have more to gain than ever from outsourcing tasks to specialist companies.
This is especially true for those who rely on legacy systems that are quickly left behind in terms of cybersecurity, data analytics and aggregation, and real-time solutions. Donald believes these companies need innovative technology partners more than ever, as they need to protect their data, deliver customer-centric services, and operate at the speed of smaller, agile startups.
“I would absolutely recommend virtual partners for established businesses. The incumbent operators do not keep pace with the fintechs. Therefore, if they take the old-fashioned approach to getting big companies to work with big companies, it will actually slow the pace of change, ”he said.
Uittenbogaard says that with traditional financial institutions with average abandonment rates of between 70% and 90%, leveraging a digital partner who can not only provide a managed and hosted platform for them, but who can design a forward-thinking solution with the customer in mind can be the difference between “sink or swim”.
Meanwhile, other experts point to a reimagining of the entire business ecosystem and customer experience. Paul Crérand, Field CTO EMEA, MuleSoft says that rather than interacting with each stakeholder individually, customers will expect a unified experience, “where products from multiple organizations are delivered as part of a single digital journey.” In this model, each organization ceases to “own” the customer, to become part of a larger digital value chain. “
Crerand believes the most effective way to make this a reality is for fintechs to redefine their offerings as an API-based platform, as this allows them to unbundle and repackage all of their customer data and digital assets into as a set of capabilities that are exposed for other organizations, such as retailers and insurers, to recover and reuse.
He adds, “By taking this approach, every digital capability becomes a product that can be exposed to third parties through APIs, allowing other companies to integrate fintech services into their own offerings.
“The more open fintechs are, the more opportunities they have to expand their ecosystem and improve the customer experience, taking advantage of new sources of revenue in the process.”
THREE reasons why fintechs need digital partnerships
Outsourcing to a specialist technology service provider means not having to retrain staff or recruit experts to run it and increase budget control and transparency.
Outsourcing to experts reduces the chances of making a bad hire and exploding the budget for new in-house technology. Additionally, businesses try a number of options until they find the right solution rather than making a costly mistake they have to live with.
- Faster delivery to the market
If a business can provide faster service, that is often enough to differentiate it from the competition. The better the technology, the faster the service