NEW YORK--(BUSINESS WIRE)--Better aligning communications and actions between financial institutions and fintech companies is the next critical step to ensuring the continued growth of the fintech sector, according to a new report by Accenture (NYSE: ACN) and the Partnership Fund for New York City.
Based on a survey of nearly 90 executives at financial institutions and fintechs in New York, London and Hong Kong, the report, “Mind the Gap: Addressing Challenges to Fintech Adoption,” notes that while the ability to adopt external innovation is creating competitive advantages for financial services companies, collaboration between those companies and fintechs remains challenging and time-consuming.
The report also shows that these organizations are not adequately addressing their shared problems and have different perceptions regarding what’s occurring in the technology onboarding process between banking, insurance, asset management and other financial institutions and their partnering entrepreneurial fintechs.
“By taking a few pragmatic actions – including reconciling any disconnects in the fintech adoption process and agreeing on best practices – these organizations can help ensure the growth and success of the fintechs, which will benefit all parties,” said Maria Gotsch, president and CEO of the Partnership Fund for New York City and co-director of the Fintech Innovation Lab.
The survey identified a number of disconnects between the perceptions of financial institutions and fintechs, particularly when it comes to regulatory concerns. For instance, 60 percent of the financial institutions, versus only 17 percent of the fintechs, are actively working with regulators to address concerns associated with fintech adoption. In fact, nearly four in 10 (38 percent) of the fintechs said they are not currently addressing regulatory issues with the financial institutions at all. In addition, when asked to identify the top reason that products stall during the proof-of-concept phase, New York financial institutions cited compliance and security issues, whereas fintechs cited a lack of dedicated employees or funding resources and misalignment between use cases and product roadmaps.
“The great success and rapid expansion of fintech has been so dramatic that financial institutions and technology entrepreneurs haven’t yet had time to merge key existing best practices with the innovative new capabilities,” said David Treat, a managing director at Accenture and co-director of the Fintech Innovation Lab. “Sustained growth now requires increased communication and coordination between financial services companies and fintechs in areas like security and compliance, signoffs and approvals, and resources.”
The report also found that fintechs and financial institutions disagree on the time prospecting should take, with nearly two-thirds (62 percent) of fintechs saying it takes longer than four months, while 80 percent of financial institutions say it should take less than three months. One factor both parties agree on is the need for financial institutions to have a dedicated point-person for fintechs to work with to ensure the process runs smoothly. However, only about half (53 percent) of financial institutions actually have such a point person assigned.
The report recommends specific steps that financial services firms and fintechs take to increase adoption of fintech innovation, including:
- developing process maps to sequence steps and clarify roles;
- streamlining the pathway to “go” or “no go” decisions during proof of concept;
- creating sandboxes, or safe work areas, to avoid potential security, compliance and risk management roadblocks; and
- emphasizing regular, timely communications between financial institutions and fintechs.
For the research, the New York Fintech Innovation Lab queried 87 executives at financial services firms and fintechs in New York, London and Hong Kong regarding their views on the innovation onboarding process. The respondents comprised 52 Fintech Innovation Lab alumni (typically fintech CEOs) and 35 chief information officers and chief technology officers of financial services companies that serve as senior sponsors of the 2016 and 2017 Labs.
About the Partnership Fund for New York City
The Partnership Fund for New York City is the $150 million investment arm of the Partnership for New York City, New York’s leading business organization. The Fund’s mission is to engage the City’s business leaders to identify and support promising NYC-based entrepreneurs – in both the for-profit and non-profit sectors – to create jobs, spur new business and expand opportunities for New Yorkers to participate in the City’s economy. As an “evergreen” fund, its realized gains are continuously reinvested. The Partnership Fund Board is led by Co-Chairmen Charles R. Kaye and Tarek Sherif. Maria Gotsch, President and CEO, leads the team.
Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions – underpinned by the world’s largest delivery network – Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With more than 435,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.