The Future of Banking Is the Bank-Fintech Hybrid

As more people think of banking as a digital activity, fewer feel the need to stick with a traditional financial institution over the latest fintech company. For instance, when we surveyed people in the Ultimate Guide to the New World of Banking about whether the pandemic restrictions have made them more or less likely to use banking services from a fintech company, 30% said the restrictions made them more likely and 9% said the restrictions made them much more likely.

The reasoning from the customer’s perspective should be clear: The pandemic has often forced them to use digital banking channels more frequently, making them more accustomed to this mode of banking.

However, the situation isn’t necessarily dire for traditional financial institutions. After all, people still demand the service-oriented approach that leading financial institutions specialize in. To get a sense of this demand, we surveyed people at the outset of the Covid-19 shutdown (March 7th, 2020) about whether a simple and easy digital experience or a friendly and helpful staff was more important to them. Then we asked the same question four months later (July 11th, 2020). We found that the numbers more or less held steady, with a slight increase of 3% of respondents saying that a friendly and helpful staff is more important.

This data may be surprising during a time when people are relying on digital banking more than ever before, but it speaks to the ongoing importance of having the expertise, knowledge, and responsiveness that the best financial institutions are known for.

In an era where the lines between banks and fintech companies are blurring, the future belongs to those who best blend these two approaches. Even during a global pandemic where the need for digital services is stronger than ever, people still want to be able to contact a human. They want technology and service. 

This hybrid of banking and fintech represents the future of financial services.

As Ryan Caldwell, Founder and CEO at MX says, “If you're a fintech and you're trying to scale, you can't just stay a fintech. And if you're a bank and you're trying to survive, you can't just stay a normal bank. There's going to be a new entity that's not like a current bank at all and not like a current fintech at all. That will be the winner.”

And Sam Maule, Key Account Executive at Google and former Managing Partner at the consultant firm 11:FS, adds, “We're seeing the morphing of different companies in the solutions that they provide and how they work together. … It has become paramount to understand how you contribute to an ecosystem.” 

In short, those institutions and fintech companies that provide both cutting-edge digital technology and a helpful staff will have the edge.

How do you do this well? Jane Fraser, president of Citi and CEO of Global Consumer Banking, says that the model of the future is "a light branch footprint, seamless digital capabilities, and a network of partners that expand our reach to hundreds of millions of customers.”

A light branch footprint, seamless digital capabilities, and a network of partners. It’d be difficult to state the way forward more succinctly than that.