Fintech (financial technology) was supposed to disrupt the banking industry. And while it’s definitely changing the game, it’s not playing out the way many people predicted.
As I write this from my hotel room, still reeling from everything I learned at the Fintech Canada Conference, I think my key takeaway from the conference is that banks want to work with fintech companies—but navigating the various challenges is proving more difficult than expected.
You have to admire the enthusiasm of all of the founders of various fintech companies that are here. Most of them are young and hungry to shake up the financial space with their creative solutions.
But just as they are finding that the larger institutions are receptive to collaboration, they are also coming to grips with the challenge of navigating the regulations that protect our financial systems. Ask most fintech founders and they’ll tell you they’d prefer to see regulations disappear, but regulations exist for a reason and fintechs are realizing they need to align with banks in order to scale.
A New Focus on Customer Experience
I can’t help but view all of this through the lens of digital transformation. The reason the banks and larger financial institutions are so keen to embrace fintech is somewhat obvious— the demand for tools that improve the customer experience is already here. For banks though, their current technology isn’t meeting that demand.
That was really the recurring theme of the conference—improving the customer experience and getting to a place where customers have transparency and control over their own data and banking information.
Open Banking is Coming
Within two years, open banking (meaning financial institutions offering open APIs for third-party developers to build tools around) will arrive. Within four years it will be the norm. During that time, financial institutions and fintech startups will be working in tandem to improve the customer journey.
For example, customers aren’t motivated by applying for a mortgage, they are looking for a home. It seems simple enough but represents a shift in perspective. Full credit to the banking institutions present here for recognizing and embracing these changes.
Collaboration is Still a Challenge
The Fintech Canada Conference is in its fifth year. The key players in the space have already accepted that working together is the path of least resistance. If only it were as simple to get the technologies to work together in the way the stakeholders are prepared to. The integrations that the players on both sides want to see happen are not easily achieved.
For most financial institutions, the challenge lies with their existing technology. Upgrading their solutions to support this open banking future could cost more than 2x what their initial costs were to build what they have now. And starting over can be similarly prohibitive.
What This Means for Avato
The reception I received here has been overwhelmingly positive—everyone I spoke to is amazed at what we do and are finding it highly relevant.
For the uninitiated, Avato is a hybrid integration platform; a middleware layer that allows for operators of legacy software solutions (like the highly regulated and secure environment of banking systems) to make their data available via open APIs in order to interface with newer, user-friendly tools. In other words, we can help financial institutions and fintech companies find their common ground, much faster.
Whether you were at the conference or not and want to learn more about any of the above, please don’t hesitate to connect with me here. I’m excited to share how we can help, and my virtual door is always open if you have questions.