The financial world is changing due to the evolution of both traditional banks and fintechs in the digital world. However, banks and fintechs are approaching the digital revolution from different perspectives and with different strengths. On the one hand, banks have strengths such as their size, brand, track record and their established client portfolio. Meanwhile, fintechs have a greater focus in terms of the digital experience they provide, their knowledge of new technologies and their closeness to customers.
In most cases fintechs offer isolated services; they don’t want to become a typical bank that provides a broad array of banking services. This is one reason why we see a lot of fintechs in the payments sector, and it is here that fintechs are taking profitable lines of business away from banks. A study by The Economist in Latin America showed that traditional banks consider that their most dangerous competition will be new systems and payment providers. For example, we’re seeing the rapid emergence of companies such as RecargaPay in Brazil, which helps people use their cell phones to make payments, and has already been downloaded more than 10 million times.
One of the major positive aspects of this trend, is that it is helping the sector and our society reduce the number of unbanked people. In fact, according to the Global Findex database, 25% of people with a bank account in Argentina and Peru had opened their account in order to receive digital payments. This figure shows one of the great benefits of the digital revolution in the financial sector.
Although there are clear differences between these types of companies, from Belatrix we can see that both are using very similar techniques to achieve their objectives in the digital world. In our experience with both banks and fintechs, the importance of methodologies, such as Agile development, is growing.
Agile development is a methodology that provides significant value for banks and fintechs since it offers a framework to make incremental changes. It emphasizes empowerment and transparency, at the company, team and individual levels. The culture of being “agile” is exactly what companies need to achieve success in the digital world.
In our experience working with one of the most prestigious banks in Latin America, we first talked about how an innovative and fast culture could be implemented in their organization which had a long tradition and history. While it was clear that the use of Agile would be of great help, its adoption represented a challenge since it required significant changes in practically every aspect of the company – from processes to culture, to the formation of teams.
As a result, the bank first implemented Agile in its innovation center, and later, decided to scale the methodology through the entire organization. This resulted in a crucial change for the bank in terms of how it built new products and services. You can read more about how the bank transformed its operations in our case study, “Creating innovation in a large traditional bank”.
We are increasingly paying attention to the potential of digital technology in the financial sector. However, it is a difficult issue for many executives, given how fast technology continues to change and the variety of options available. Into that mix, executives also face a rapidly changing competitive environment within which they need to improve their operations, services, and products. How can they be more innovative and offer better products for their customers, while at the same time keep up with existing business priorities? This is one of the key challenges for 2019.
April 23 / 2020
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