While I mentioned the huge growth of Chinese fintechs in a previous blog, I didn’t want to take away from the enormous growth that the US has seen in the fintech sector. In recent years, dynamic growth has not only presented consumers with new products, but it has also driven change across the entire US financial industry.
A recent study by EY Financial has shed some light on the biggest factors for fintech growth and their effects on the future of commerce in the US. Here is one of many takeaways:
Partnerships with Financial Institutions
Despite the growing legitimacy of fintechs in the eyes of consumers, banks aren’t sitting back and watching. In fact, many are now offering their own fintech products or partnering with fintechs to bring new options to their existing customers. The common bond between banks and fintechs is that they aim to be the solution to a range of challenges for consumers. What was a differentiator for banks a few short years ago, offering innovative, fintech-inspired products is rapidly becoming a necessity. Think about the recent changes to online and mobile banking, the ability to take a picture of a check to make deposits is all but universal now.
While banks may have been slow to change, they have emulated the insurance industry’s adoption of fintechs. Insurance companies were some of the first to add fintech offerings to their product lines. Companies like Esurance came as disruptors but were quickly acquired when the demand became obvious. Now almost every major auto insurer has a mobile app with a range of services from accident reporting to roadside assistance. Banks have begun to build partnerships in the same way.
Fintechs need to partner as well, as they need access to charters to make financial transfers work. These mutually beneficial partnerships have also allowed consumers to enjoy convenience when their data can be shared between services. While it may sound like a security risk, many consumers have stated that they are comfortable with their personal info being shared between banks and fintechs if it means they see better rates or available products. As with many changes, these partnerships are all fueled by the demand for convenience by consumers.
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