How Long Will FinTech Need Banks, and Vice Versa?


According to Klarna CEO Sebastian Siemiatkowski, a leading Swedish FinTech unicorn, banks must act more and talk less when it comes to being customer-centered. Talk is talk, but in reality, customers see little change in the approach of financial institutions.

That’s why the public is hearing about fostering alliances between banks and FinTech platforms more and more often.

Why is customer-centricity so slow to take root? As highly conventional financial institutions, banks have developed a strong framework of procedures in terms of corporate culture, workflow, products, and compliance. It is not easy to break with convention and create an environment that embraces novelty and innovation.

This necessitates a brand new set of beliefs to be implemented throughout the organization, top-down. Even execution-driven senior management has to face decades-old walls because tearing them down means risking reputation and trust, a bank’s most valuable assets.

Banks have strict regulations in place to leverage the credibility of other financial institutions, receive licenses, and have deposits guaranteed by governments. This lends them a high degree of trust, making them appear credible to their customers. This is referred to as Signaling Theory and is an economic law of contract theory. It describes how trust is built before cooperative partners even know each other.

The approach can be applied to many incidences and everyday situations, such as having a recruiter verify our degrees and professional experience if we want them to help us find a job.


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