Traditionally, banks and large financial institutions have stayed clear of young FinTech companies or any emerging technology solution, deeming it too risky or expensive or immature. If this were Thanksgiving dinner, capital markets would be your very old-school grandmother sitting at the head of the table – while fintech startups are represented by the medley of cousins, ages five through 25, relegated to the “kid’s table” in the other room.
The financial industry lags behind other industries due to antiquated technology. While enterprises across industries have long been focused on AI, machine learning and integrating any predictive models to remain competitive in today’s digital landscape, banks and financial are hamstrung by outdated, back-end technology. But the financial industry has reached its breaking point, and the status quo is no longer a viable option.
Financial institutions risk going out of business if they do not quickly update their technology. Unfortunately, updating decades-old technology across private- and hybrid-cloud environments while meeting increasingly complex data and industry compliance laws like GDPR is no easy feat – especially for an industry famous for its aversion to digital transformation.
Industry analysts have been anticipating this digital transformation crisis within finance for years now — and more recently, began publishing predictions for how it might play out. In January, we published a blog post in response to analyst firm, CB Insights’ report titled “Fintech Trends to Watch in 2018” which stated that fintech infrastructure would help startups and banks in these three ways:
Only halfway through 2018 and these predictions have already proven true.
We’re finally seeing financial institutions forgo relying on internal resources or old partnerships with consulting firms to fix their technology problems, in favor or partnerships with third-party companies and tech startups.
The symbiotic relationship between a startup/fintech solution and financial institution will deliver better engagement from employees and customers, more robust products or solutions, faster time to value, and lower costs. Fintech partners provide the agility and innovative thinking that traditional banks and financial institutions need.
Following are examples of 2018 capital market and startup partnerships, via Forbes:
There has never been a more urgent need for collaboration between capital markets and fintech startups. We’re excited to share with you down the road, some of the exciting things our team has been cooking up.
Speaking of cooking, remember that one cousin who declared himself vegan at Thanksgiving dinner 2015 and Grandma hasn’t spoken to since? They’re now working on a cookbook together on vegan alternatives for Grandma’s traditional holiday dishes.