Some fintech companies are finding billion-dollar markets in the gaps left by outmoded banking services. Nevertheless, there are still many obstacles in the road before a complementary system is created that takes room for them both.
Banks are slow to come around to innovation, but with a little effort they can remain more competitive than ever.
Newer digital standards and transparency laws even the playing field, and the institutions quicker embrace of new technology can position themselves better for success.
Not all fintech startups are out to hurt banks, and in fact, many services use legacy platforms to bring them more customers.
One such example is ezbob, a new platform that has partnered with multiple leading banks, including the Royal Bank of Scotland.
ezbob’s platform sorts through data from over 25 sources in real time to create a seamless, automatic lending process for banks’ customers.
The platform is not the first to streamline an old process using new tech, but it seems to be positioned to lead the Lending-as-a-Service (LaaS) industry. Tomer Guriel, ezbob’s CEO, believes that LaaS is the future as bank need not be the only lender in town. “Working with the banks is no easy task. I can tell you that we were trying for 4 or 5 years to partner with banks and luckily enough we decided to lend money ourselves using our platform. The company wouldn’t have been able to survive if we sat around waiting for a contract with a bank.”
LaaS is one of the many ways that banking has been transformed very recently, and should show banks that all partners can benefit when efficiency is improved.
Making real time decisions can cut overhead and help bankers to focus on the big picture while technology runs the show. In terms of LaaS specifically, some new startups are looking to use their peers’ modern lending services to enter the space without sacrificing equity to investors.
Swimming Against the Current
New fintech startups must be wary. Even as they aim to disrupt existing industries, new firms must be wary of regulations.
Companies still need to be compliant with advertising, reporting, and product rules or risk potentially catastrophic fines and sanctions.
Traditionally, the regulatory system has little to no patience for those who skirt the rules.
Thus, it is vital to build transparency and methods for ensuring that the data is infallible. Startups that consider these compliance issues from the outset have a big advantage in a fast-changing ecosystem.