FinTech is one of the most telling development of all, taking some financial institutions by surprise. Consumer behaviors are evolving and considering the extent to which technology continues to advance around us, there is a revolution in bill payment that has redefined the way people bank. This shift has inevitably influenced corporate banking as well, pushing businesses in the direction of more modern accounts payable solutions.
What does Fintegration mean for banks?
Simply stated, it means client retention and increased revenue. The addition of innovative corporate payment solutions to a bank’s portfolio provides a competitive edge and a modern solution that keeps corporate customers loyal in addition to increasing the ease, and frequency of their spending.
Solutions like paysystems leverage single-use virtual credit card numbers with little to no capital investment required. In addition, vendor acceptance is three times higher than other card programs and the average transaction sizes are ten times larger than what we see with traditional purchasing cards.
Fintegration in banks :
- Include IT in the due diligence and integration planning: an acquisition should not be closed without an “IT battle plan” that takes into consideration the current state, transformation plan and the future plan of the combined entities.
- ‘Ringfence’ the new culture: banks should consider ‘ringfencing’ the new entity – with its own leadership, compensation, rules and even physical location – in order to preserve its innovative mindset.
- Make regulatory integration an early priority: once a deal is closed, fintech employees should be on-boarded onto the bank’s compliance platform and have mandatory training sessions.
- Make data security an early priority: a security audit should be part of due diligence.
- Data integration: there should be a roadmap for the integration of data which should include a primary data management system that allows an integrated, common view of customers.
- Integration of enterprise infrastructures: this step comes last. The process of integrating the two infrastructures can be a stimulus for migration legacy systems to more cost-effective cloud networks.
Fintech companies for successfully embracing innovative banking solutions
Fintech companies have potential in areas such as regulatory technology (regtech) and trading technology (tradetech) – to ‘disrupt’ or even replace bank services. These companies are not aiming to become banks; rather delivering a specific solution or services where they have identified a need. These companies are experienced in integrating multiple banks, while banks themselves support only their own platforms. Effectively, the benefits include simplification, standardisation and ease of adoption. In more general terms, as smaller and more nimble businesses, fintechs can bring new solutions to market far more quickly than banks, and can therefore respond to evolving customer needs more dynamically.
Fintech companies recognise that the quickest and most effective route to market with their solutions is to work with those banks with an established network and trusted customer relationships, and embed their solutions into the corporate value chain. This is not a one-way benefit: banks are able to harness new and innovative solutions quickly to create differentiation with customers and respond to changing needs, while customers are able to leverage new capabilities without the need to find, acquire and implement separate solutions.
When deciding on potential partners, banks must not only carefully assess the quality of the company and the solutions they offer, but how closely solutions can be integrated within the wider technology infrastructure. This underpins the notion of ‘fintegration’.