We’re currently living in an age of major disruption within the financial services sector, powered by multiple sectors coming together to form new partnerships. So argues Andries Smit (CEO, Upside) in a guest opinion piece today…
Cooperation between banks and telcos is not new. They’ve worked in tandem for many years, each staying in their own lane and sharing only what was necessary. This is all changing now however, as both industries begin to realise the vast benefits of a much deeper collaboration.
Partnerships bringing together these two powerful industries that merge innovations, products and markets could become one of the most prominent FinTech ecosystems of the next few years, set to majorly disrupt consumer finance as we know it.
A New Trend on the Rise
Collaboration of telcos and FinTech companies is snowballing, as more businesses look outside their industry in the fight to stay on top. The effect of this rising trend is transforming access to financial services through innovation and efficiency and helping to improve financial inclusion globally.
A recent success story is the Upside and Tribe Mobile partnership. Upside’s unique access to consumer bank accounts and first-party spend data will help 9 million overlooked UK adults get access to a mobile contract that bigger networks won’t give them by significantly improving the credit check process to measure what consumers can actually afford.
The rapid growth of the telco and FinTech sectors has driven these new mutually beneficial partnerships to arise. The partnerships are creating new revenue opportunities in both sectors, as well as helping businesses meet soaring consumer demand, as they increasingly want more frictionless and tailored services and a better customer experience. They address the crucial need for universal communication and more accessible financial services for all, provided by modern technology.
Solving Industry Problems Together
Individually, both the telco and finance industries face their own issues and so companies are turning to these partnerships as a mutually beneficial solution. The main concern for banking and finance is how to stay relevant in the modern world. For the telco industry, it’s that it has reached a level of saturation in its own market and companies need to find new ways to retain their industry leader position with a competitive edge.
Telcos used to be known for being highly transactional businesses. However, due to increased competition, the sector has had to come up with new ways to expand its operation and develop a robust structure to ensure they remain relevant. Telco companies that use outdated business systems are unlikely to keep up with consumers that are increasingly focused on convenient digital services and technologies, making it difficult to improve and expand their reach and long-term objectives.
In the same breath, FinTech has brought about a big technological change and has disrupted various business verticals but accessibility is still an issue. FinTech has arguably replaced many traditional financial methods as well as innovating in others to bring banking services to non-bank sectors, like retail. However, most FinTech companies are start-ups, which means some may need to rely on the right partnerships to allow them to scale their technology and access the capital and markets they need for growth and to build loyalty.
Despite the issues the sectors may have as their own separate entities, both sectors have common pursuits that are intrinsically linked to providing consumer-centric services. This has been even more ideal for helping the sectors adapt to the current economic conditions as well as the rise of a cashless society and the emergence of new financial assets like cryptocurrency.
FinTech is an enabler, the potential of which we are only just beginning to tap into.
CEO & Founder, Upside
A Winning Collaboration
And so, companies have switched onto to the benefits of partnerships to solve these industry-wide problems that were too big for any one company to fix.
FinTech is an enabler giving non-bank industries access to financial services and telcos have unrivalled access to customer markets. Together they can improve consumer finance product offerings, ensuring banking stays relevant and able to adapt to evolving consumer demands, as well as reaching a wider customer base with financial services. This winning collaboration will retain digitally savvy customers, acquire previously excluded customers and therefore help both sides to diversify revenues.
As the digital payment segment is increasing rapidly, the opportunity for telco businesses to integrate with FinTech companies has allowed telcos to harness their customer’s data and use it to offer personalised finance-related products. Along with this, FinTech companies can track customer-oriented metrics which will later help telco companies to improve their range of product offerings.
For FinTech businesses, these partnerships provide an opportunity to gain a wider customer base with a telco offering an incomparable customer reach and universal accessibility in both rural and remote areas.
New Customer-Centric Focus
In our recent white paper, The Tipping Point of Loyalty, I noted that the battle for consumers’ time, attention, and loyalty is fiercer than ever before. Customers demand more and more, and the new telco and FinTech mergers are a product of this. A solution, if you will, to consumers demanding more than any one company can provide.
These partnerships are formed on a desire to meet consumer needs. As a result, they enable companies to take on a more customer-centric focus from the very beginning. One of the main consumer advantages to these collaborations is access to new product offerings such as free current accounts, higher interest rates on savings accounts, and cashback features for mobile payments that actually meet consumer needs.
Greater convenience is also on offer as with FinTech support, telcos can add financial products to allow customers to purchase, manage and track their payments from one main place. Offering increasingly fast and frictionless products and services will give companies a significant competitive edge.
It is clear that the rising trend of telco and FinTech collaboration is one to keep an eye on. Already on a course for major disruption, the collision of these two industries will only continue to grow and produce new benefits for consumers in this space. As FinTech innovations increase, so will the opportunities for industries like telecommunications or even retail to unlock value for customers through the addition of financial services.
I repeat again; FinTech is an enabler, the potential of which we are only just beginning to tap into. We can be sure, without any doubt, that the future of partnerships like this is bright. It’s exciting! Innovation has led us here and innovation will continue to drive us forward into new possibilities. Telco and FinTech are going to make financial services more accessible than ever before, and this is only the beginning.
ABOUT OUR GUEST WRITER
CEO & Founder, Upside
Andries Smit is CEO and Founder of fintech Upside, an experienced speaker with over 20 years of experience in leading financial service organisations across the UK, Canada, South Africa and Asia. Andries is the former MD of Global Digital Factory at Aviva, experienced also in leading startups, SME Discounts, scaleups, DollarDex, and venture investors, AE Ventures. Andries is passionate about consumers saving behaviour and the power of open banking and innovation in fintech.