Financial IT, UK: Cognizant’s Vice President and Head of Banking and Financial Services in The UK & Ireland Says Collaboration Between Traditional Banks and Fintech Firms Holds Fruitful Results for Bank’s Customers

“There are a number of challenges that traditional banks face nowadays,” says Tony Virdi. “Banks are struggling to retain relevancy and also be profitable. The other thing is traditional banks are facing a huge amount of regulation.” Excerpts:

“The regulatory pressure puts a lot of additional costs on banks. They have to cope with this regulatory burden, whilst at the same time remain profitable and generate shareholder value whilst being as efficient and compliant as possible. At the same time, Fintech firms stir up the market together with new ‘challenger’ banks.

Our experience at Cognizant shows that successful collaboration between traditional banks and Fintech firms can bring really fruitful results to the bank’s customer base.

The big advantage that traditional banks have is that they already have a large customer base. Whereas the new challenger banks mostly have to grow their customer base from scratch. Given the current economic climate it’s all about trust and loyalty and making sure that you look after your customers.

Traditional banks should put efforts into not only maintaining their customer base by making sure they give them a service, which may not be the best service in terms of technology but an effective and efficient service from a customer experience perspective. In terms of profitability the traditional banks can make money on cards, mortgages and loans and typically provide a wide set of services, challenger banks often target their services towards current accounts, niche and wealth management services.

Traditional banks perform well when they focus on a certain targeted customer segment. That could be people over 50s or SMEs for instance. I think as long as you create focused and personalized value for the customer you can build a customer base within any specific target market.

Innovation labs surely work well but you have to look at any innovation within a certain time period. It doesn’t work right away, it’s not like a light switch. Most innovation projects have incubation levels of three to six months at least – and this is something they all want to shorten.

If you talk about traditional banks in general terms, they have old ‘legacy’ architecture which means they sometimes struggle to keep up with the technologically advanced and digital world. But through controlled innovation labs and supporting processes, they can build discrete products and services that can help them remain relevant to their customers and embrace new technology ideas such as blockchain or artificial intelligence.”

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