Banks and Fintech Growing Together with Inclusion
It is pretty evident that one significant effect that has occurred in the world of finance recently is the birth and steady rise of fintech startups. This start-up business aims to leverage technology to provide financial products and services that are significantly more user-friendly, simplistic, and cheaper than the already established services. However, very few fintech startups are still small and may be unable to finance their operations to be pervasive or even on a larger scale. This is possible through the local banks partnering with Fintech startups.
This forms a partnership between fintech startups and banks, which opens wider access to a broader base of less developed clients, comprehensive regulatory arrangements, and even the necessary resources to move innovation to a scale recognized by a wider audience. At the same time, the banks can see how they benefit from the agility and technology-led solutions in the Fintech sector to their service design, create a far better user service experience, and reach out to many unprivileged markets. The moiré or joining of interests in this kind of relationship could be very far-reaching in driving inclusion with financial services that extend. Now, banking product and service requirements are addressed to serve the currently unbanked and underbanked developing countries well.
This blog explores just a few successful partnerships between traditional banks and fintech startups that work toward being more inclusive. These have case studies from around the world, illustrating how collaboration changes the financial landscape by encouraging innovation in financial services.
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Financial Inclusion is the Most Desirable Thing
Before zooming in on specific partnerships, it is increasingly vital for us to understand why financial inclusion is necessary. To put this point into perspective, the World Bank reported that around 1.7 billion adults worldwide are without a bank account or any financial services. Not availing of this access is due to the high charge attached, the geographical barriers, and the number of services.
The Role of Bank-Fintech Partnerships
The craze for frontline financial inclusion has permitted partners to maintain collaboration between traditional banks and fintech startups. The potency of results from this collaboration is best so long as the fintech startup can deliver flexible and cost-effective products and services. At the same time, the traditional bank brings its existing customer bases, regulatory know-how, and financial resources.
Here, one can also develop some innovative products for many unbanked and underbanked people, especially in emerging countries. Here are a few case studies on successful partnerships between banks and fintech startups that are driving inclusive growth.
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Case Study 1: BBVA and Atom Bank
The large Spanish banking group BBVA has now collaborated with Atom Bank, a UK-based digital bank, to deliver innovative banking solutions. Known for its mobile-first approach and product offerings in savings accounts, mortgages, and business loans through digital platforms, Atom Bank connects with customers.
With BBVA, the entity can leverage Atom Bank’s digital banking and innovation expertise to serve better the underserved customers that most traditional banking models will leave out. Conversely, it allows Atom Bank to scale quickly against the firm’s established infrastructure and regulatory knowledge.
One of the primary functions of this new relationship is the co-innovation of digital savings and loans that customers may access cheaply. This uses machine learning algorithms and other alternative data sources to personalize financial options, primarily for people lacking a proper credit history.
By integrating BBVA’s vast customer base with Atom Bank’s digital-first approach, this partnership has bridged the financial inclusion gap and offered more customized services to individuals excluded from the traditional banking system.
Case Study 2: Standard Chartered and Fintech Startups in Africa
Standard Chartered has invested in several fintech startups and is working with several local fintech companies to drive innovation in this region. A good example is partnering with M-Pesa, a mobile money company in Kenya. M-Pesa has a vast customer base of 40 million active users who are most able to save, send, and receive money through their mobile phones without having a bank account. That last partnership provided the customer direct access to bank services, in which one could now open an account or apply for a loan at M-Pesa via a mobile phone.
Moreover, Standard Chartered has tied up with fintech like YAP, which is based in the UAE and provides digital banking to all people in the Middle East and Africa. These partnerships would help bring new cheapest services into the market and make them available to everyone and anywhere in the Middle East and Africa regions.
By leveraging mobile technology and collaborating with fintech startups, Standard Chartered can offer affordable financial services to individuals in regions with limited or nonexistent traditional banking infrastructure.
Case Study 3: Barclays and Crowdfunder UK
In the UK, Barclays is one of the biggest banks in the country and has partnered with Crowdfunder UK. This crowdfunding platform allows individuals and businesses to raise capital for various projects. This partnership will enable Barclays to offer funding options for small businesses and startups, helping them grow and scale.
Crowdfunder UK utilizes a great deal of the network and the capabilities of Barclays for projects toward financial inclusion that produce social outcomes. For example, through it, Barclays contributed funding to projects toward social businesses, which built affordable housing, educational programming, and employability training for communities at economic disadvantage.
Through partnerships with fintech companies such as Crowdfunder, Barclays can support inclusive economic growth and contribute to the cause of financial inclusion in the UK, hence to people who would otherwise not receive traditional funds.
Conclusion
The collaboration between banks and fintech startups is transforming the financial services industry, leading to the development of more inclusive financial products and services aimed at underserved communities. As these partnerships expand, we can anticipate a wave of innovative solutions that promote financial inclusion, including mobile banking apps, microloans, savings options, and digital insurance.
Thank you for exploring this journey with us! If you’d like to share your thoughts or join the discussion, please contact us at news@intentamplify.com.
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