There are around 400 fintech companies in Australia at the moment, as a country we’re ranked fifth in the world for fintech adoption, and our use of mobile banking apps doubled in the last two years. So do emerging fintech platforms spell the end of traditional banking as we know it?
According to a Swift Institute report on the API economy and digital transformation in financial services, the days of big banking aren’t over – but there are plenty of changes coming in the way we manage our finances.
Collaboration is key
Rather than fintech companies replacing traditional banks, it seems collaboration between the two may be the future of finance. According to the Swift Institute report, while fintech provides flexible and innovative platforms, traditional banking has its own advantages, including a longstanding tradition of being “the safest and most trusted place for people’s money to be.”
It’s this customer trust that Raman Bhatia, head of digital for HSBC in the U.K. and Europe told CNBC would ensure banks were “sufficiently primed” to meet the challenge presented by fintech.
“We have the trust of customers for more than a 100 years and we are investing heavily in and learning from fintech, partnering with fintechs and developing our own digital propositions for our customers, and the customers appreciate that,” he said.
So as finance goes digital, banks will be responsible for what the Swift Institute report calls “re-intermediation” – not only facilitating transactions, but also lending their trustworthiness to newer fintechs, “the same way iTunes can guarantee quality of products for those who purchase music from their platform.”
For example, the newest home loan lender on the scene, fintech lender Tic:Toc, is backed by the established Bendigo and Adelaide Bank. This partnership enables the Tic:Toc platform to offer home loan approval in just 22 minutes, with the security of 150 years of lending experience behind it.
Amazon, Apple and Facebook: the real gamechangers
The digital platforms that really shakeup how we do our banking may yet prove to be our favourite social media and shopping spots.
According to the report, companies like Amazon, Apple, Facebook, and Google are already widely used and trusted, which means they “can be an emerging threat” to more traditional finance platforms.
These online spaces “are already starting to support customers with more and more financial services.” For example, Facebook recently launched peer-to-peer payments between messenger accounts in the US, and took out a patent to do so in Australia as well.
But, as with specifically finance based technologies, banks have already began partnering with these social media and online shopping giants in order to reach customers.
Credit card giant Citi recently announced a collaboration with Amazon.com, which allows cardholders to use rewards points to pay for online buys. This allows Citi to reach customers in spaces where they’re already shopping. As Julian Potter, Consumer Banking CEO at Citi Australia, said, “You need to be where your clients are, delivering services how they want them.”
So while it’s not time to give up on your traditional savings account just yet, now might be a good time to take a look at digital innovations entering the banking space. Start by checking out these seven budget and savings apps every Aussie needs.