The FinTech industry has experienced rapid growth, with roughly 70 percent of senior banking executives stating collaboration with FinTechs is a highly important opportunity in the coming years. With this rise in popularity of FinTech collaborations also comes a variety of factors to consider on how banks will remain competitive and profitable within these partnerships.
To examine the evolving relationship between financial institutions and FinTech companies, our team at CPQi surveyed a range of high-level executives to discover their current sentiments regarding financial technology and talent. We asked these professionals key questions regarding their hesitations, interests, and plans concerning this topic, offering 5 main responses for them to choose between: Very Much Agree, Somewhat Agree, Neither Agree nor Disagree, Somewhat Disagree, or Very Much Disagree.
Below are 5 key findings from this survey:
1. Concern Over Finding Talent is Growing
While the need for FinTech professionals is exponentially growing across the banking industry, the talent pool has remained relatively small. As a result, banking executives are concerned over competition for existing talent increasing in 2022.
When asked if they are concerned about the war for talent getting worse this year, 55.6 percent of respondents replied with “Very Much Agree,” and 44.4 percent of respondents replied with “Somewhat Agree.” For this question, no responses were given under the other three response options.
This concern over talent is clearly a primary point of interest for financial institutions, especially those who still strive to maintain in-house talent rather than outsourcing to third-party companies. Yet, partnering with third parties may prove to provide a key solution to overcome this talent shortage.
Sticking to traditionally closed-off business methods will only further the distance between these institutions and new talent. Comparatively, partnering with resourcing institutions may provide access to talented individuals and teams without the hassle of onboarding and training.
2. Technology Budgets Will Remain Intact
With the technological era of finance still in full swing, our survey results revealed that financial institutions intend to keep their technology budgets intact for 2022.
When presented with the statement “Our technology budgets will decrease in 2022,” 33.3 percent of survey respondents replied with “Very Much Disagree,” with 33.3 percent more responding with “Somewhat Disagree.”
There was some deviation from this overall sentiment, with 11.1 percent responding “Neither Agree nor Disagree” and 22.3 percent responding with either “Very Much Agree” or “Somewhat Agree.” The reasons behind these responses may vary due to institutions already having invested heavily in technology in years prior, or even looking for more affordable technology options.
Still, the majority of our respondents indicated that their technology budgets will not be decreasing over the next fiscal year. This is likely thanks to the ever-evolving nature of FinTech, with new and more advanced technologies continuing to be developed and released as we speak.
3. Banks are Looking for Greater Innovation
Innovation has been a buzzword for several years now – and it will continue as a priority for financial institutions well into 2022 and beyond.
When asked if they are looking for more innovation from suppliers in 2022, the overwhelming response was “Very Much Agree” from 55.6 percent of respondents. A further 33.3 percent answered with “Somewhat Agree.”
No responses were given in the “Somewhat Disagree” category. As for the “Neither Agree nor Disagree” and “Very Much Disagree” categories, these received just 5.6 percent of responses each.
From these responses – coupled with the responses from the question regarding technological budgets – it is evident that financial institutions are placing heavy emphasis on continuing to adopt new technologies and embrace innovation in 2022.
4. Banks are Interested in Leveraging Open Banking
Open banking has been on the rise for some time now, as more and more third-party financial service providers are entering the industry.
In response to the statement “We are interested in leveraging open banking in 2022,” 38.9 percent of respondents answered “Very Much Agree,” and 33.3% answered “Somewhat Agree.” A further 27.8 percent responded “Neither Agree nor Disagree,” with no responses in the two disagreement categories.
What these responses reveal is that the financial industry is slowly but surely evolving away from the traditional closed-off business model and towards a more collaborative way of thinking. Open banking is a crucial enabler to digitally-based services and FinTech partnerships, making this growing acceptance of the banking method essential for success in 2022.
5. Concern Over Neobanks is Varied
Although sentiments surrounding open banking are vastly in favour amongst financial institutions, there is still some friction when it comes to neobanks.
When asked if they are concerned about the impact neobanks will have on their company, responses were highly varied. “Somewhat Agree” stood as the most popular answer, with 38.9 percent of respondents choosing this option. The next most popular was “Neither Agree nor Disagree” at 33.3 percent, followed by “Somewhat Disagree” at 16.7 percent and “Very Much Agree” at 11.1 percent.
This diverse range of responses could be due in part to the fact that each neobank is fairly different from the next, with some willing to partner with traditional institutions and others wanting to maintain a separate and loyal clientele of their own.
While it is hard to say what the future relationship between traditional banks and neobanks will look like, open banking will undoubtedly play a major role in the two’s ability to coexist and collaborate. For instance, a partnership between a traditional bank and a neobank could potentially simplify and enhance the customer experience greatly – but this can only be made possible by first adopting open banking.
Final Thoughts: CPQi Gives Back to the Alzheimer Society
Our team at CPQi would like to extend our utmost thanks to our survey participants who made this industry report and the resulting 2022 insights possible.
After a highly successful year in 2021, we believe it is our responsibility and privilege to donate to a charity within our region. To conclude this survey, we asked respondents which charity they would like to see CPQi give back to in 2022.
The winning charity was The Alzheimer Society of Niagra, a community and organization devoted to providing dementia patients and their care partners with full support to maximize their quality of life and overall well-being. Thank you to all our survey respondents.