Note from the CEO: OMG!! Big ‘incumbent’ firms have found that partnerships with new fintech partners have……gasp, benefits. No sneaking up on those entrenched management folks. No siree, this here new fintech stuff may catch on. Join them or ignore them?
Over half of the ‘incumbent’ firms (meaning, established) surveyed by global law firm Mayer Brown report partnering with startup fintechs have reaped significant benefits. Cost savings were the best areas of partnering with a brand refreshment and revenue enhancements close behind. Overall, rather than developing innovation in-house which is expensive over half the firms found a good partnership was the way to go.
“The growing number of partnerships between fintechs and legacy players suggests that incumbents believe there are benefits to working with new market entrants.
Meanwhile, some of these collaborations are now established enough for those benefits to be measured, with a new survey from global law firm Mayer Brown showing where incumbents think their partnerships are paying off. The firm surveyed 70 UK financial services providers including banks, insurers, and asset managers.
- Cost savings. Eighty-seven percent of respondents said they were able to cut costs to some extent by working with fintech providers. These savings likely come from incumbents spending less on the development of new customer-facing services, as well as the efficiencies fintechs can bring to legacy processes thanks to their agile structures and use of the newest technology.
- Brand refreshes. Eighty-three percent of respondents said collaborations with fintechs offered opportunities for incumbents to refresh their branding. That’s likely because partnerships with fintechs enable legacy players to improve customer engagement and launch innovative products and services faster than they could build them in-house. This allows incumbents to reposition themselves as better serving a particular market, or simply as cutting-edge.
- Increased revenue. Fifty-four percent of respondents said partnerships had resulted in boosted revenue. It’s worth noting that this is the benefit seen by fewest incumbents, which suggests it may take longest to emerge as the parties involved work out a business model that suits everyone.”