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Closing the gap in fintech collaboration

Overcoming obstacles to a symbiotic relationship

These days, most conversations with financial services excecutives inevitably circle back to what's happening in fintech. The industry is buzzing with chatter and activity on fintech strategy, experimentation, investment, acquisition and integration

No function, department, or individual seems immune in an environment where the nature of work across almost every industry is being disrupted by a number of factors. Rapidly evolving digital technology is driving increased automation, affecting the proximity of where work is performed, and giving rise to new and open talent models. With so much change in the air, many provider organisations are understandably apprehensive about how to grapple with such exponential change and its implications on how, where, and by whom work gets done. What these organisations need to keep in mind with this shift is the immense opportunity to alleviate current pain points like nursing shortages and physician burnout, and refocus professions on mission oriented, fulfilling work.

World Economic Forum founder, Klaus Schwab, has dubbed this transformation in the way work is performed “the Fourth Industrial Revolution”—making the distinction that it is not about replacing people, but rather how new technologies are “fusing the physical, digital, and biological worlds.” This augmented workforce combines people and machines to get things done in a way that is not only more productive, but also more rewarding to the worker.

While these conversations have been taking place for several years now, what seems to have changed is the tone, content, and sense of urgency in such discussions. We’ve moved well beyond speculative theory about what fintechs might be able to do for the industry and into practical application. Most incumbents recognise that while some fintechs may be coming after a piece of their market share, more often than not these tech-driven startups offer new tools, platforms, capabilities, and approaches to improve customer experience and bolster operations. With collaboration and co-development on the rise, the lines between incumbents and insurgents are starting to blur.

Yet many institutions dealing with fintechs are finding the transition in mind-set and operations to be challenging, even frustrating. Interviews with more than two-dozen incumbents, fintechs, and accelerators from across the industry and around the world identified a number of hurdles, both internal (often involving organisational or corporate culture issues) and external (such as regulation and lack of industry-specific expertise among startups) still to be overcome.

Problems: Obstacles hinder emerging ecosystem

Generic pitches, lack of industry experience undermine startup credibility

One point we heard repeatedly during our interviews is that financial institutions have become much more demanding about what they expect from fintechs pitching products or investment opportunities. “Incumbents are no longer being taken in by fintechs that merely ‘talk the talk,’” according to a leading fintech accelerator. Indeed, they noted, the focus has shifted from “cool” generic ideas to practical solutions addressing specific problems in a particular financial services sector. Moreover, we were told that these days most financial institutions and individual investors prefer to see evidence that fintechs can deliver on what they promise, rather than place their bets on theoretical pitches. This seems to be reflected by the recent pivot in investment trends, with the number of new fintech launches down substantially, yet the amount of capital being raised remaining robust. With launches in steep decline, money is now flowing into later funding rounds, a trend Deloitte first identified last year in our initial report on fintech investment trends.

Watch the video: Closing the gap for fintech collaboration

Fintech by the numbers

In the past few years, we appear to have entered a new phase in the evolution of the financial technology sector. The thinking of many financial institutions has evolved, and they're now seeking to team more with emerging technology companies to gain access to new markets and products, greater efficiencies, or just the "secret sauce" that makes innovation go. At the same time, many fintechs themselves have sought to join with large financial institutions to expand into new markets, gain industry and regulatory knowledge, and even simply cash out.


There are countless articles and reports about fintechs these days, but how much of the analysis is grounded in fact? And how much is mere speculation? We wanted to understand the evolving ecosystem with data as the foundation. In particular, we were interested in the nature, type, and scale of engagement between fintechs and both investors and traditional financial institutions.


To understand which businesses and solutions were gaining and losing, we analyzed the pace of new company formation, amount and type of investment, and the most meaningful geographic regions for fintechs. Our key findings include:


  • New company formations are in decline over the past two years
  • Funding in many categories is still on the rise, especially in certain banking and commercial real estate categories
  • New funding sources are emerging, suggesting that we're entering a phase of consolidation and maturation
  • Fintech acquisitions and initial public offerings (IPOs) are also ramping up
  • There continues to be meaningful regional variability in fintech creation and investor interest

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