Survey: more banks are open to fintech partnerships

54% say their financial institutions have faced greater competition over the past three years from digital alternatives. However, these executives also indicate that they are better positioned to compete. Notably, 84% of respondents reported that they have, to some extent or more, the necessary technological tools to create new digital products and services. The survey was conducted for a new report from Economist Impact, ‘Threat assessment 2022: digital competition in global finance’, which was commissioned by WSO2.

In addition to reviewing the competitive landscape, the report examines how banking institutions are addressing cultural change, embracing digital skills, and relying on technology to achieve a competitive advantage. The full report is available here.

Many of the banking firms have responded to the competition by investing in their digital presence. Among survey respondents, 47% say they are serving customers via digital channels (online or mobile applications) to a large or great extent, and 77% of these executives predict their organisation will serve customers via digital channels to a large or great extent over the next two years. 

At the same time, the growth of new digital entrants in the banking sector is shifting views on who is a competitor versus a potential partner. Among executives surveyed, 26% identified increasing competition from Banking-as-a-Service (BaaS) or embedded finance, such as from non-financial firms including technology companies, and telecoms providers, among others. 

Meanwhile, only 12% of survey respondents listed increasing competition from financial technology (fintech) companies—in stark contrast to the widespread fear of competition from fintechs just a few years ago. Notably, the Economist Impact report cites a 2021 report from banking consultancy Cornerstone Advisors, which found that 48% of banks surveyed had partnered with fintech startups over the past three years.