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How EY can Help
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Discover how EY teams work with startup and scale-up FinTech companies and financial institutions to innovate and transform for growth.
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What financial services firms are looking for
Large corporations and financial institutions are engaging with and investing in FinTechs for strategic advantage, increased market share and stronger bottom-line performance. Specifically, they turn to FinTech solutions to reduce acquisition and service costs, enrich customer experiences, automate functional processes and strengthen risk management capabilities.
Partnerships between FinTechs and the biggest banks, insurers and asset managers are particularly powerful because of their complementary strengths. Large players have extensive customer relationships, large scale and ample funding, which can help FinTechs reach scale. This inter-connectedness helps financial institutions and commercial companies leverage FinTechs’ capabilities to resolve structural challenges resulting from complex operating and organisational models.
For instance, some FinTechs offer technology that can help large firms reduce their customer acquisition and service costs. RegTechs, among the most promising types of FinTechs, have developed tools that make it faster and easier to meet regulatory requirements for Consumer Duty, know-your-customer (KYC), anti-money laundering (AML), cyber stress testing and operational resilience.
Looking ahead, embedded finance, environmental, social and governance (ESG) issues, cryptocurrencies and digital assets will continue to reshape the financial services market. FinTechs are already building the solutions to navigate these market megatrends.
Because FinTech solutions provide what many established financial institutions are looking for, banking, insurance and asset management leaders should focus on the upside of collaborating and co-creating with FinTechs, rather than view them simply as competitors. Indeed, investment plus collaboration is the formula for long-term success, based on the need to accelerate innovation in support of better consumer and business outcomes. The participation of FinTechs, larger financial institutions, investors and regulators creates an ecosystem of collaboration.
Exploring and assessing the FinTech landscape
The most successful collaborations require investors and established financial institutions to understand which start-ups have the most disruptive technology and which scale-ups have the strongest prospects for growth. Some investors will naturally gravitate to earlier-stage, future looking frontier FinTechs that are exploring solutions around cryptocurrencies, blockchain and other technologies on the leading edge. Others will prefer to back challengers with more developed solutions or those firms with promising horizontal capabilities.
For established firms, it’s all about identifying where the future of financial services is taking shape today and which FinTech offerings align with their long-term strategies. Then they can look for a good cultural fit and identify the most effective ways to integrate new capabilities and exchange data with FinTechs.