What is fintech and why does it matter?

Why is fintech important?

Fintech growth and the associated competition has challenged organisations like Lloyds Banking Group to consider how they operate. This includes everything from how fast they respond to changing needs, to how organisations design themselves to be successful. The models of the past were structured around linear, heavily manual processes. The models of modern technology, on the other hand, demand us to be more networked, automated and real time data-driven.

There is one behaviour in successful fintech companies that has always stood out for me and it’s the relentless focus on the customer; designing for the outcome, not the process that you think will get you there.

It’s this healthy competition that has been good news for the digital customer experience, as more and more organisations look at improving their services so that they are faster and their products are easier to use, more inclusive and considerate of individual needs.

How is fintech shaping the future of banking?

Fintech has already had an impact in parts of banking. And as more businesses and consumers rely on fintech to manage their everyday needs, the more the market will continue to grow in places, and in ways that don’t exist yet.

I think the more exciting question is: what’s coming next? As technologies such as augmented and virtual reality enter our everyday lives, and as experiments in quantum computing become more mainstream the response from financial services will need to show up in totally new ways.

Why is fintech growing?

Technology is developing and evolving at rates we cannot realistically keep up with. Part of the challenge over the next few years will be identifying the solutions to problems we need to solve, rather than technology looking for a problem to prove it has value.

The friction we have seen in the past between fintech and incumbent banks is passing, and there is broad acknowledgment that success looks like a well curated set of partnerships that create outstanding customer experiences and value. The opportunity comes from working together with fintechs, rather than just trying to compete with them.

How does fintech help financial services?

Fintech provides challenge, competition and motivates the financial industry to try new things and ultimately improve the customer’s experience. After all, competition is healthy, it keeps us switched on and alert to the changes we need to embrace to be the best version of ourselves.

And it’s not only the customer that is benefiting; the speed and agility with which many fintechs move has inspired traditional financial service providers to structure themselves to support a more responsive model too.

In short, fintechs are constantly identifying new opportunities and new spaces to operate in, which has forced organisations who were comfortable in their traditional approach to re-evaluate how they currently operate. Ultimately, the customer should be the winner in all of this.

How is Lloyds Banking Group investing in fintech?

Here at Lloyds Banking Group, we know how important fintechs are for delivering better outcomes for our customers, clients and colleagues. And we recognise the importance of investing in the sector to support its growth and understanding how the industry is changing.

In fact, with over 18 million online customers, we are currently the UK’s biggest digital bank.² Moreover, we are committed to strengthening our collaboration in this area. Some of our recent partnerships include Form3, CFP Green Buildings and AND Digital.³

We’re an active member of the Fintech Delivery Panel, and have signed up to the Fintech Delivery Pledge. And we are committed to making it as easy and transparent as possible for fintechs to work with us to create great outcomes for our customers and clients.