June 28, 2020 | 5 min read

Banking innovation lies in a good parent-child relationship

MoneyLive-Digital Mark CousinsMoneyLive-Digital Mark CousinsMoneyLive-Digital Mark Cousins

Next week, some of the smartest minds in fintech and banking will gather for MoneyLIVE’s much-anticipated Digital Banking Goes Digital online event. 

With an emphasis on the importance of connections between incumbents and fintechs, MoneyLIVE’s event offers a chance to map out an innovative future that involves all players.

But anyone who knows our sector won’t require an introduction to the challenges of bringing together the old guard and new upstarts.

As fintech commentator Chris Skinner says, the situation we’re in is a bit like a parent-child relationship, where one side wants to protect whilst the other wants to explore.

The question is: how do we create a safe place in which to unleash one’s creative imagination whilst working within the boundaries that protect us?

Well, parents are happy when their children are able to flourish free from danger– something the closure of schools during the coronavirus pandemic has brought home to many of us.

Similarly, banks that understand how fintechs can help them safely expand their product horizons will also flourish, and attract more customers. 

The ideal secure space for banks to explore creative ideas is in a sandbox. A sandbox allows developers to build and test new API-controlled products with the ability to offer a vast range of functionality and unrivalled personalised customer experiences.

Returning to the child analogy, a sandbox is a a place where inquisitive youngsters can play safely with buckets and spades. Here you can build anything in the sand, and be as creative as you like without messing up the lawn or flattening prized plants. 

Likewise, in a sandbox, you can create a new card programme without intruding on or creating problems for existing banking infrastructure. And that’s a helpfully reassuring proposition for bank innovation teams. 

The beauty of the sandbox is that it allows banks to grasp the digital transformation nettle something they desperately need to do. Not only because there’s a customer-driven incentive to collaborate with fintechs, but because of growing competitor-driven pressure.

Externally, a critical mass of savvy consumers has now been exposed to the benefits of personalised and seamless digital experiences through the likes of Netflix, Spotify, and Amazon. They expect the same innovation from their banking provider. 

Internally, bright employees who feel constrained by the bureaucracy of a large organisation are breaking out and setting up their own banks– doing things differently, taking customers and building the new world. 

It’s clear then that the risks to banks that talk of but don’t deliver digital innovation are growing exponentially, and this has only been accelerated by the global health crisis. 

But it’s even clearer that by working with fintechs, banks can innovate safely, attract new account holders, strengthen customer loyalty, and build a sustainable banking future.

 At Marqeta, we’re looking forward to learning more about these opportunities and risks for banks at Digital Banking Goes Digital, an event we’re proud to sponsor.

If you’re going along, do say hello. We’d love to hear your thoughts on how we can encourage closer collaboration between banks and fintechs– and bring some new harmony to this particularly challenging parent-child relationship.

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