Three Steps (and One BFF) for a Perfect Bank-Fintech Match

Image courtesy of pixel2013 via Pixabay.com.

For many financial institutions today, going digital has the potential to unlock new market segments, streamline operations, cut risks and greatly improve customer relations. But for institutions considering this proposition, size matters.

Larger institutions tend to have the resources to source and apply new financial technology (fintech) or, if those resources are not available in-house, to enlist partners that can help them improve internal processes and deliver innovative offerings. Several large financial institutions in emerging markets — including BBVA, Diamond Trust Bank, ICICI and Stanbic Bank, to name a few — have been sponsoring incubators and partnering with fintech startups, often with a view to acquiring or “acqui-hiring” them to develop new capacities. A recent study by CFI-IIF points to the numerous benefits of fintech/bank partnerships, and another PwC study estimates that over 80 percent of the world’s financial services firms are expecting to increase fintech partnerships in the next three to five years.

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Banco W’s Culture Change Boosted Quality, Won Admiration as a “Great Place to Work”

As Colombia’s Banco W was transitioning from a microfinance institution to a bank in 2012, newly-arrived Chief Executive Officer José Alejandro Guerrero Becerra realized he needed to trigger a culture change that would improve service to low-income clients and deliver on a commitment to making a significant social impact. Five years later, Banco W’s service quality ratings were up, it had relaunched its brand and image, and held an over-subscribed note issue.

Such transformation can sometimes come at the cost of internal upheaval but instead Banco W was recognized by “Great Place to Work” as one of the best workplaces in Colombia last year.

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Banco W: Using Evidence to Optimize Savings and Loan Payment Channel Choices

What does a year’s worth of channel transactions tell us about a client’s loan payment preferences and opportunities to switch channels? Why do clients repay their loans at the same place month after month? How might financial service providers motivate their clients to explore alternative loan payment channels? These are some of the questions that we, the OPTIX team at BFA, set out to learn with our partner, Banco W in Colombia. As financial service providers increase coverage through myriad financial access channels, their customers have an opportunity to switch to a different channel for the same transactions. Understanding client interaction with various channels is a complex mix of preferences, use cases, pain points, business case and scalable feasibility. So where does a financial services provider start?

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