The Role of Big Banks vs. FinTechs Going Forward

What does the future hold for banking? What will be the position of small banks?

How to stay competitive in the era of endless choices and provide the best products to fit all your customers’ needs?

Customer-centric testing. It is all about focusing on the client in your decision-making, but also acknowledging that it is almost impossible to predict what customers want without sufficient experimentation.

That said, it is easier said than done. A combination of the right tech infrastructure, people mindset in the right place and strong collaboration with FinTech/partners is key to expedite this continuous change and learning.

How can banks turn customer feedback into a growth opportunity?

Feedback is a huge, free source of insights to drive our customer understanding. The challenge is not in recognising it, it is in creating the priority, tech foundation and evolving mindset to implement it every day.

Actionable and focused customer feedback is an art. The big difference between a bank and a small FinTech is that we do so much, and cover so many edge cases that bringing the insights together takes time, often finding the focus on where to apply those insights, how to move fast enough to be relevant where so many competing priorities take place.

Things like CX day, customer feedback analytics tools, and integration into active squad’s activity ongoing help. Industrialising this further, where the insights->experience flow shortens is the real challenge we are working towards.

 

What will the banking business models of the future look like?

I think the most interesting dimension to think of is the role of big banks vs. FinTechs in this game.

• Big banks: The combination of low cost of acquisition in a sticky industry like finance, and the continuous push to become tech-savvy companies narrows the gap. The deep customer relationship, insights, and access to customers the big banks have will take a long time for the FinTech to match.
• FinTechs: If you look at the growth & valuation of neo-banks or niche FinTechs, you see amazing numbers. Some of those truly challenge the big banks. At the same time, when you look at the profitability and viability of the business models, there is still a big and painful step the FinTechs will need to go through – the monetisation challenge. Once the live up to it, the playing field will become more equal.

I see a future where these two become only closer over time. The banks learn to deeply integrate partners and 3rd party capabilities, and several neo-banks, moving closer and closer to a bank (incl. all the pros and mostly cons).

The clear losers of this journey are the small/local banks. The complexity, scale benefit, and agility possible to achieve in the FinTechs & big banks will make the space for smaller banks narrower and narrower.

---

Ohad KOTLER is a leader of innovation and growth in finance. As ING’s Global Head of Retail Investment Products, he was heading product development and strategy of Investment offering for retail clients from brokerage to managed portfolios in 14 retail countries, a portfolio generating >€800m in revenues. Recently, he started a new role as Product Area Lead in ING’s two biggest countries leading the Investments value propositions and commercial activities. With 6 years of consulting in McKinsey focused on financial services, he led development and distribution of Robo-Advisory solutions, retail lending neo-banks and leading core strategy for banking CEOs in Switzerland, Netherlands, the United Kingdom, and Israel. Ohad was an economist in the Israeli Prime Minister’s office, holds an INSEAD MBA and Master in Financial Economics.