Capgemini recently released its World Retail Banking Report for 2016, assessing the impact of fintech on the banking industry. 16,000 customers surveyed in 32 countries and 140 industry ‘experts’ opined in the report, which is geared towards helping banks understand and respond to the current competitive landscape.
It’s an extremely comprehensive report, but here are the key data points for everyone to know on how the landscape is evolving on fintech acceptance by customers:
- 63% of customers across the globe are using a fintech product or service.
- Fintech providers are gaining popularity and increased adoption due to customer perception of ease of use (82%), fast service (81%) and user experience (80%).
- Banks underestimate the value placed on these services. Only 36% of banks believe that fintech providers offer a faster service (45-point gap to customer perception), and only 40% believe they offer a good user experience (40-point gap).
- Customers are more likely to refer family or friends to a fintech provider (55%) than to their bank (38%).
- 88% of customers surveyed trust buying a product/service from a fintech provider.
- Only 16% of customers surveyed are likely to purchase an additional product from their bank.
- 96% of banking executives agree that the industry is evolving towards a digital banking ecosystem, but only 13% say they have the systems in place to support it.
Granted, these statistics are focused on consumer banking, where we know the disintermediation of banks by fintechs is relatively far along, but the same kind of disruption is also starting to happen in commercial banking. Change comes more slowly to the B2B world, but it does come. When it does, the impact will be even bigger, because the B2B market is even bigger. For example, the market for consumer payments is estimated to be $3tn. The market for B2B payments is $38bn.
The disruption will look a little different because in the B2B world, businesses will always have a relationship with their bank and they will always need a trusted repository for funds. And unlike the consumer world, where fintech is all about speed and the wow factor, B2B fintech is more about making processes more efficient with technology and support services.
Fintech adoption is increasing
As with their consumer counterparts, B2B fintechs are all about making financial services more accessible, convenient and easy to use. They’re giving users more control and transparency, offering services to previously unaddressed markets, or taking functions done by banks and doing them better, faster and cheaper.
As they did with payroll years ago, fintechs will likely take over many of the services businesses currently look to banks to provide. Domestic and cross-border supplier payments and working capital lending are two areas where fintechs are already making inroads. These are areas where banks haven’t innovated in decades.
Banks will evolve. They will continue to provide value, but they will be hard pressed to deliver the same customer experience level and service levels that financial technology solutions deliver. In recognition of this, many banks are now seeking to purchase, partner or invest in fintech firms.
Though the specifics of what will change in commercial may differ from retail banking, I think what’s important here is the shift in attitudes. Fintech adoption is increasing around the globe, and fintechs are catching up to banks in terms of customer trust. Consumers who are comfortable with fintech in their personal lives will become increasingly likely to consider fintech solutions for business.
The takeaway for business customers is that if you’re evaluating accounts payable or other finance solutions, look beyond your bank. There’s a whole new array of options on the market now. Get a demo and take a look at the alternatives. The differences in efficiency and service will surprise you.
– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Photo: Billion Photos, Shutterstock.com