Fintech: The Digital Transformation in the Financial Sector

Abstract

Digital structural change is piling up the pressure on traditional banks. Despite societal and regulatory challenges banks have recognised the importance of digital developments and are working intensively on potential solutions and strategies. Many (digital) innovations can primarily be experienced at the client front-end. There is, however, much more to this topic. Isolated solutions are often only implemented in a fragmented fashion from division to division. Innovation processes are still being driven forward laboriously using an outdated silo approach. Furthermore, many banks’ command of the global “language of the internet” is still deficient. The banks will not achieve resounding success using such methods. Digital change requires far-reaching structural reforms that extend beyond all internal and external bank processes and systems. The new market players from the non-bank sector, by contrast, have an almost perfect understanding of the language of the internet. First and foremost it is the scarcely regulated digital ecosystems, but there are also many fintechs that are using their platforms and ingenious “walled garden” strategies to dominate markets across a range of sectors. Their recipe for success is based on the harmonious interplay between implemented hardware and software. Via the optimum interlinking and utilisation of compatible and interoperable standards/technologies we—the platform-spoiled consumers—are courted with attractive products and services conveniently, globally and from a single source. Traditional banks could do this, too, however. This now provides the opportunity to swiftly learn and adopt the strengths and particularly the monetarisation strategies (walled gardens) of the successful digital ecosystems