Anders la Cour, CEO of Banking Circle group, examines causes of the ‘re-bundling’ of financial services, and the benefits the collaborative trend is likely to deliver in the B2B banking and payments space.
With the advent of PSD2 and Open Banking, FinTech businesses were empowered to tackle individual elements of the value chain. They focused on where they could do things differently from the incumbents to fix a specific problem or fill a gap. This led to a de-bundling of banking services, as businesses and consumers accessed services from a wide range of providers rather than the one or two big banks with which they had always previously worked.
Today, significantly boosted by COVID-inspired digital acceleration, financial institutions (FIs) are recognising the value of delivering multiple solutions from a single online platform. By expanding their proposition and re-bundling banking solutions, FinTechs can solve more than one problem for their clients enabling them to better serve their end customers. And, in collaboration with FinTechs, banks can add value and expand their offering quickly and without investing in building new solutions in house.
FIs need to offer a range of financial services their clients’ customers want and need – a well as those they may not yet realise they need – without dissipating their brand values or service mission. Re-bundling of financial services achieves this, not only delivering competitive advantage but elevating FIs’ value as a whole.
Recent research from McKinsey (‘Global Banking Annual Review 2021: The great divergence’) found that capital markets are anticipating a ‘great divergence’, in which the gap between the valuations of banking industry’s leaders and followers widens significantly in the next two to three years. According to McKinsey, FinTechs are pivoting their value propositions and staying on the right side of the divergence by either doubling down on key value propositions and core markets or diversifying and collaborating to build a platform of curated, re-bundled services, generally working with a licensed partner who can deliver the regulated financial services.
The culture of collaboration born in 2020 and maturing in 2021 is inspiring a new ecosystem approach to deliver financial services that are fit for purpose for a marketplace that can’t afford slow or high-cost processes to hold them back. 2022 is the year the financial ecosystem comes of age.
Payments of the future
That’s where Banking Circle comes in. As a next generation financial technology platform for global commerce, we enable payment companies, banks, global marketplaces and online merchants to accelerate the digitalisation of their customer and supply-chain interactions, with a suite of modern aged financial solutions. By accessing multiple solutions from a single ecosystem, FIs will not only be able to respond more rapidly to market opportunities, gaining a ‘first to market’ position, but they will see significant cost savings as well as that all-crucial ‘stickiness’.
Sponsored by Banking Circle — This article was first published in the Silicon Luxembourg magazine. Read the full digital version of the magazine on our website, here. You can also choose to receive a hard copy at the office or at home. Subscribe now.