USING FINTECH TO MANAGE COMPLIANCE AND RISK FOR FINANCIAL INSTITUTIONS
RC: What do you believe are the most significant developments to have taken place in the FinTech space over the past 12 months or so? What do you consider to be the key drivers for change as far as financial institutions are concerned?
Stoeckert: The traditional banking system is in the early stages of an arms race with external innovation that is focused on accommodating the increasing presence of a burgeoning tech-reliant consumer. For years, financial institutions (FIs) controlled how and when new financial products and services were delivered from or sponsored by FIs or non-bank financial institutions. Now, financial innovation is happening outside of FIs. The post-financial crisis generational consumer lacks the loyalty to the traditional FI that they have built their business model on.
Potapov: FinTech startups are creating new and better ways to manage everything from micropayments to small business lending to financial sharing. The companies are catering to a consumer that is actively seeking and using tech-savvy alternatives to the traditional FI. In response, FIs are subtly tapping external innovation, both as a growth strategy and to defend their territory.
RC: What are the major advantages for financial institutions in utilising FinTech? Conversely, are there any risks or disadvantages that need to be overcome if FinTech is to be more widely adopted?
Potapov: The obvious and most often highlighted advantage FinTech offers to FIs is innovation in user experience innovation through mobile applications and cutting edge features, which simplify and accelerate processes. However, the biggest advantage lies in the vast potential of FinTech to improve risk management and compliance processes that support FIs ability to service and strategically grow its customer base. For this advantage to be fully realised by the financial system, FinTech needs to be widely adopted.
Jul-Sep 2016 Issue