In banking, size is becoming a strength in fintech battle

PEOPLE will always need efficient ways to use and access money and financial services, but their idea of who is best positioned to deliver these services has rapidly changed. Moving money, spending money, saving money have become commoditised so where do traditional banks find a commercial sweet spot that allows them to dominate the new banking landscape? We believe the answer lies in what has often been perceived as a weakness - their size and scale.

Traditional banks have undoubtedly suffered as smaller, faster more agile competitors cherry-pick certain, often lucrative, parts of their business. These players - often grouped together under the fintech banner - quickly embrace innovation and a digital-first approach that certainly (until the Covid pandemic came along) most banks struggled to keep up with. It can be death by a thousand cuts as a multitude of specialised disruptors each take a bite out of the traditional bank business model of deposits, transactions, loans and investments.

The challenge is traditional banks will never be more agile than fintech players. The latter are inherently nimble, while banks have large complex organisations to navigate, stricter regulatory environments, complex technical infrastructure, legacy IT solutions and large product portfolios. It's a zero-sum game to try and compete with fintechs on the field they have chosen for battle. There is another way where banks can choose the field and win.