Report by Stears, a data and intelligence company, predicts a new era of collaboration between banks and Fintechs that will lead to partnerships between both segments of the economy.
The report also highlighted the high costs associated with payment infrastructure development.
Fintechs are facing increased scrutiny and compliance measures, necessitating a reevaluation of their operational strategies. This regulatory shift, coupled with the high costs associated with infrastructure development, has paved the way for significant involvement in the banking-fintech ecosystem.
Against this backdrop, Stears’ analysis predicts a notable increase in opportunities for banks to lend their infrastructure to fintechs. The collaborative approach, born out of regulatory challenges and cost considerations, is expected to foster a more symbiotic relationship between traditional banks and fintech innovators.
“This financial and regulatory hurdle catalyses a novel era of collaboration between traditional banks and fintechs. The strategic partnership between these sectors is poised to be a game-changer, providing fintechs with crucial support to navigate regulatory challenges and infrastructure costs while enabling banks to tap into cutting-edge technological innovations. Overall, consumers are poised to benefit from the product innovation these collaborations would birth,” states Bolatito Bickersteth, Financial Analyst at Stears.
Further, as banks navigate the impact of the tough operating environment on their books in 2024 and seek to attract low-cost deposits, we note potential in collaborations with small and medium-sized enterprises (SMEs) and tapping into the unbanked population.
Stears advocates for a strategic and collaborative approach, urging banks to leverage their established infrastructure and extensive networks to tap into the offline payment market and increase collaboration with SMEs. In doing so, banks will address the needs of the unbanked and the funding needs of SMEs and will also be catalysts for economic growth.
