The integration of the IT systems play an important role when banks buy rivals or agree to a merger. One such example from Switzerland was the deal agreed between BSI and EFG International in 2016. The best a bank can hope for is to receive a new platform through such a deal, the worst to get something an even worse patchwork solution.
The alternative for many smaller banks is to source the back office out to a specialized third-party provider. This of course entails that the bank becomes dependent on the third-party provider’s innovative powers and speed. Small banks can exert only so much pressure on the specialist, not least because they can hardly threaten to switch provider quickly.
3. The Digital Interaction With Clients
Tech giants such as Amazon and Google are experts in analyzing customer activity and in offering tailor-made solutions. Banks find that much harder. Only 49 percent of the banks surveyed by Morgan Stanley have a comprehensive digital customer view and are able to come up with business ideas that fit their demand. The first such innovations are budget planners, robo advisers and book-keeping solutions.
4. Meddling With DNA
The development of a fintech DNA is a sensitive topic for big financial corporations. In an early phase it helps moving innovative products outside the core company, reducing the time it takes to launch a prototype and lowering the pain when things go wrong.
Worrying about failure is the biggest hinder on their way to a fintech DNA, Morgan Stanley said. To cancel projects may seem the easiest solution given the need to come up with a satisfactory quarterly report. In the long run however, a quick fix lowers the innovative powers of a company. And that could proof much costlier for shareholders in the long run.
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