Over the past few years, FinTech has gained momentum within Canada. As a new and growing market, FinTech startups have not only provided the Canadian market with innovative solutions in technology and financial services, but have also been a catalyst in creating thousands of jobs. For Canadian businesses and consumers, the introduction of FinTechs have provided them with the opportunity to adopt meaningful products and services that were not being offered by traditional financial institutions.
In contrast, Canadian incumbents have developed a different perspective of FinTechs; as a threat to their monopoly of the Canadian financial services space. But this perspective is miscalculated. Rather, Canadian incumbents should see FinTechs as enablers, and not as competition. Incumbent’s view of FinTechs, has stunted their ability to engage in true innovation, whereby incumbents have prioritized the modernization of legacy systems, technology, and maintaining their market share. So that begs the question- how exactly can FinTechs help enable innovation?
Three Ways FinTechs Can Help Enable Innovation
1. Insights & Detailed Research
Detailed research and strategic insights, are at the heart of fueling meaningful innovation. Today, incumbents need to assess what they’re missing and what they need, in order to stay relevant within their industry. FinTechs provide new innovative products and service offerings that solve unique customer pain points. By investing time and resources into what FinTechs exist and the types of solutions that they offer to consumers, incumbents can engage in genuine partnerships that will help to transform their business. Platforms such as Maple by FGS for instance, help Incumbents tap into real-time data that can help fuel their innovation goals.
2. Common Innovation Goals
In order for innovation to be successful, incumbents need to have clearly defined innovation goals that they wish to accomplish. FinTechs that share the same innovation goals as an incumbent, should be seen as an ally rather than a competitor. Whether the goal is to improve the customer experience or creating a disruptive product or service, having a shared focus is integral to the success of the innovation process and creating value for both the incumbent and their customers.
The growing strength of the FinTech market, stands as an indicator of FinTech’s agility. As consumers needs and expectations continue to evolve, FinTechs have differentiated themselves through their ability in understanding the ever changing consumer, offering lower fees and disruptive business models. Lendified for instance, is a Canadian FinTech that provides affordable loans to small businesses across Canada. This type of service creates an opportunity for Canadian entrepreneurs to sustain and grow their business. A commonality across many financial institutions presently, is the lack of lending options for small businesses. By looking at the FinTech ecosystem through a different lens, where FinTechs are partners and not competitors, incumbents have an opportunity for transformation.
The shift of how Incumbents perceive FinTechs, is increasingly becoming more of a necessity. As companies such as Amazon, Google and Alibaba expand into financial products and services, these companies can leverage their existing customer bases for faster adoption. Amazon for instance, has made serious investments in payment and lending products, that will stand as a serious challenger to conventional banks. The FinTech ecosystem therefore, represents a unique opportunity. By bringing the ecosystem and Incumbents together, stakeholders become not only collaborators, but enablers in the ecosystem.
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