Why regional banks and fintech firms should seek partnership models

Innovation is key to the continuity of every firm, be it a small firm or a global giant.

On the back of the UAE innovation month, industry experts are shedding light on new technologies and the next big wave in various industries.

Looking at the financial industry, efficient and client-centric digitisation not only requires IT investment but a fundamental change in the business model.

Banks, as an example, should focus on their core competencies and seek innovative technology solutions from players who have experience in this space.

In today’s competitive landscape, banks should focus on servicing their clients and delivering relevant products rather than spending resources on technology solutions which can be sourced through partners.

Research has revealed that a typical bank in Europe uses up to 80 per cent of its IT budget purely on maintaining old systems.

Therefore, firms spending their budget on maintenance will leave little room to develop new solutions to meet ever the changing demands of clients.

Today technology is flexible and can be shared easily, via partnerships, saving not only money but time for corporations.

When we talk about technology sharing, it does simply mean buying software from a software vendor. The financial industry is complex and highly regulated and software providers might not always be able to navigate the system in a fast and efficient way. Therefore, partnerships with other fintech institutions are also needed.

Airbnb, the world’s largest accommodation provider owns no real estate; Facebook, the world’s most popular media owner, creates no content, and Uber, the world’s largest taxi company, owns no vehicles. This only demonstrates that this shift from owning assets to leveraging them has transformed a very broad range of sectors and is now reaching the financial industry.

Fintech firms currently are not looking into building the entire infrastructure needed to run their business, but rather leveraging other technology solutions and providers.

This will boost innovations as firms will focus on what they do best and on the foundation on why they were established.

All financial institutions will need to understand their role in the value chain, embrace the ethos of the sharing economy, and be prepared to work with partners to deliver a unique client service. Only this will allow more creativity and solutions as it will ease the work of entrepreneurs.

Steve Weller is the CEO of the MENA region at Saxo Bank