Should financial institutions drop their fears and fully embrace FinTech?
Partnerships between financial institutions and fintechs are showing signs of instability as half of the institutions involved desire to own the intellectual property (IP) when working with a FinTech.
The tide of digital change that threatens to hit financial services has left traditional financial organisations seeking to stay afloat on the innovation of fintechs. Innovation and subsequent success are being limited however by a hesitant approach by institutions such as banks and asset managers to embrace their FinTech partners.
These insights come from a report entitled ‘Hyperfinance’, containing research conducted by law firm Simmons and Simmons, in which 200 executives from financial institutions were surveyed on digital innovation.
Robert Gach, Managing Director, Accenture Strategy, Capital markets made the observation in 2016 that “we are now in a golden age of collaboration. Technologies like robotics, cloud computing and data analytics are accomplishing things that would have been unthinkable six years ago.”
Despite this positive previous outlook, concerns around partnerships have arisen, with 71% of those surveyed fearing cybersecurity risks, and 60% fearing the security of the solution-testing environment.
READ MORE: Could banks land grab kill fintech innovation?
In summary of the problem the report says: “Collaborating with FinTech firms is integral to innovation, but most large institutions are poorly equipped for this. Three-quarters of respondents accept they need to improve partnerships with outside firms, such as FinTechs, to accelerate innovation. Yet, they are not geared up for such collaboration, with complex decision-making processes and their approach to intellectual property causing problems.”
The report indicates that financial institutions that pursue innovation more readily stand the best chance of weathering the storm that digitisation will bring, referred to by the report as Hyperfinance.