Competitive Environment
Digital Banking &
the Customer Experience:
Disrupt or Dis-intermediate
Enrique O’Reilly
“Startup fintech companies [are] built on new and flexible technology, circumventing the cumbersome legacy systems that many banks rely on,” this article notes. The author sees interesting signs
of growth in the use of fintech across the Caribbean and Latin America, and notes that: ”Banks now
have two options: disrupt their own approach to banking and partner with fintechs, or disintermediate and innovate on their own.”
I
n many parts of the world, fintech innovation has driven
banking modernisation. Recently, dominant banks in
the Caribbean islands have also begun to face increasing competitive pressures to improve the customer experience and to become more efficient through adoption of
new technologies. Status-quo is no longer an option.
Digital innovations embraced by consumers in one region or
one industry are quickly demanded by consumers in another
geography or another market. In a climate geared toward
person-to-person and small business transactions, branches
alone are not enough. Banks now have two options: disrupt
their own approach to banking and partner with fintechs, or
disintermediate and innovate on their own.
Disrupt—Fintech Partnership: As of yet, the Caribbean and
Latin American region has yet to render a fintech hub. That is
not to say there is a lack of fintech providers coming from the
region. Startups in Barbados and the Cayman Islands, as well as
in Latin American countries, are making bids to position their
countries as the fintech leader of the region, with such innovations as Barbados’ “Bitt” and the accelerator that made a splash
in the Cayman Islands in 2014, Latitude.
While tourism and exported commodities prevail as the primary sources of income in the region, many of the islands are
looking to diversify their economies. Over the last decade, the
region has experienced a deep transformation, undergoing
strong economic growth. But recently, the Latin American
and Caribbean region faces a continuing decline in growth,
as a result of an external environment particularly adverse to
commodity exporters. As a result, the Latin American and Caribbean region didn’t grow in 2015 and is expected to contract
by 1% in 2016. Governments, banks and entrepreneurs alike are
looking to reduce obstacles to economic activity in order to
boost the economy.
F
inancial technology, also known
as FinTech, is a line of business
based on using software to provide
financial services. Financial
technology companies are
generally startups founded with the
purpose of disrupting incumbent
financial systems and corporations
that rely less on software…
fintechweekly.com
There is a trend becoming prevalent in the U.S. and Europe,
and now emerging in the Caribbean, of partnering with fintechs
instead of competing head-to-head. The nature of these startup
fintech companies is that they are built on new and flexible
technology, circumventing the cumbersome legacy systems
that many banks rely on. Many financial institutions are finding
that partnering allows them to improve the customer experience they offer, as well as participating in the reshaping of the
industry. By disrupting the traditional, competitive approach to
banking, these partnerships create a stable, growing financial
ecosystem.
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