FinTech year in review: What we saw and where we’re going

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Sibos, which is one of the premier global financial conferences, seemed different this year. The dominant story is that fintech startups and banks are better off as friends than foes. Fintech, once seen as a disruptor, is now becoming a mainstream and also a collaborating partner. Taking advantage of each other’s strengths is leading to strong value and profit. Consumers have been conditioned by Google and Apple to see that banking services can be much more accessible and convenient from a mobile device. Fintech startups have the creativity and agility to develop applications to please these consumers, but playing by the rules of this highly regulated industry costs money and ultimately slows them down. Banks, on the other hand, in addition to understanding complex regulations and having greater access to capital, know their customers and have their trust. Banks provide trust and infrastructure to a partnership with fintech.

Banks are also innovators. They are investing in education, hackathons, and other initiatives to allow everyone in the enterprise to be an innovator. Innovation hubs are opening up around the world where partnerships between banks and these startups can gel, allowing them to take chances, make mistakes and move faster together. In the end, what companies are dealing with is the trust of the consumer. This takes time and practice to get it right. We need to move forward, but need to do it thoughtfully and slowly.

Technology isn’t a disruptor

Let’s face it, technology is only a disruptor to those who are not prepared to use it. Those who see technologies such as cloud, blockchain/distributed ledger, artificial intelligence, and machine learning as opportunities to modernize, reduce costs, and improve customer experiences, will be the leaders.

The U.S. banking industry is going through a period of record profits, so some banks may be reluctant to change. There are also huge legacy issues where existing infrastructure cannot be demolished in order to accommodate customers who are still attached to old methods. For example, 13% of American adults do not use the internet, meaning personal checks is a prime form of payment for these bill paying, American consumers.

Think modular – building with blocks

Fintechs started dominating in the digital channel by reaching clients through bots, social media and other digital channels. This success was enabled through APIs, which can be defined as the standardized way applications and services communicate with each other. For banks, APIs bring an opportunity to easily integrate and experiment with new financial technology, and how to implement it into their sector.

APIs are not new to banks, but using them to create applications that are more modularized rather than monolithic is. Banks can then use partner APIs along with their private APIs to create their own innovative digital banking applications. This technology also makes it possible for banks to combine data from outside their firewall with the massive amounts of data that they have saved but not used yet.

A new competitor arises

Despite the often friendly atmosphere between banks and fintechs, it’s not time to relax. There are more threats looming. Perhaps the bigger threat to banks are coming from companies outside of the traditional financial services industry. Amazon, Google, Facebook and Apple have begun to dip their large toes into the financial industry pool. These technology giants have deep insight into their customers’ buying habits and how to market to them for return business.


IBM is serious about helping banks with the challenges that continually arise. To help connect fintechs and banks, IBM has launched a platform called IBM Cloud for Financial Services that provides all the essential building blocks for the development of financial services applications. Learn more:

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