Yishay Trif Reveals Why Banks & Fintechs Should Collaborate, Not Compete

Yishay Trif, CEO of MoneyNetint, reveals why competition can be counterproductive for business.

“Can competition ever be bad for customers? After all, it’s universally accepted that business rivalry is the great driving force of the free market, spurring organisations to deliver better, more innovative products and services.

The struggle for supremacy between fintechs and established financial services is one of those rare cases where competition can actually be counterproductive, and far less beneficial to customers than collaboration. How come? It’s simple: because fintechs and banks each have something the other doesn’t. If they try to compete on the same playing field, the only certainty is that whatever services they develop will be imperfect, lacking what the other side can bring to the table.

That’s not to say banks and their digital challengers should never compete. But when it comes to delivering the next generation of digital financial services, both sides have so much more to gain through collaboration and cooperation. And so do their customers.

Leaders in Their Fields

The tech industry has a lot of cheek pretending to be banks – and we say that as a fintech ourselves. Being a bank isn’t just a case of moving money from one account or wallet to another: it is about understanding customers as individuals and supporting them in their financial journey through life, from their first bank account to buying a house or car, to helping them plan for their retirement.

Yes, traditional financial services took a big reputation hit after the last banking crisis, but the fact remains that they are trusted by customers in their millions. Digital challengers (including tech firms like Apple and Google) might be muscling in on their patch and stealing away market share, but in many ways they’ll never compete: for example, on the range of cradle-to-the-grave services that banks provide, or face-to-face financial advice in their extensive branch networks.

And yet the financial services industry is changing, and far too fast for traditional banks to keep pace. The mobile money revolution, along with other digital developments like blockchain, is opening up vast new opportunities for better, faster and more affordable services. Burdened by legacy technology stacks that sometimes date back to the days of tape, High Street banks and other established financial players simply can’t match the agility and innovation of fintechs and electronic money institutions (EMIs).

In trying to copy their challengers’, the banks are fighting a losing battle. Even if they’re successful and manage to bring a new digital service to market, by the time they’ve caught up the rest of the world will have moved on to something better. But fintechs have equally large disadvantages, not least their almost infinitely smaller customer reach. The truth is, while both fintechs and banks are leaders in their field, the whole world will have to wait a long time for next-generation financial services if they continue trying to compete with each other. There’s a better solution for everybody.”

The Future is Collaborative

“Companies like MoneyNetint are building the payments infrastructure of the future — in our case, enabling fast, low-cost, reliable international transfers. But fintechs face a practically insurmountable challenge if we try to do this solely on their proprietary platforms because they have to obtain a local banking licence in each jurisdiction, partner with in-country banks, and connect to local payments infrastructure. The only alternative to achieve true international reach would be to onboard the whole world onto our platforms.

That’s why fintechs and EMIs are forming partnerships with the traditional banking sector, along with providers like Ripple who can circumvent international borders through the blockchain, to give us worldwide scale. Banks have what fintechs crave: customer accounts in their millions, billions even. But in partnering with us, banks are not taking part in their own overthrow: by collaborating, our two worlds can thrive by doing what each does best.

So while tech players are trying to become banks and banks are trying to copy tech firms, the truth is that neither can usurp the other without losing what makes each of them special.

Partnership will make us powerful, enabling us all to streamline our operations and focus on delivering more agile, faster, innovative and more comprehensive services with greater appeal and relevance to customers. Together, we can help businesses reach new markets anywhere in the world, while delivering a range of other benefits such as more efficient, more cost-effective business processes.

Don’t worry, there will still be areas where banks and fintechs can compete, and so continue to drive forward innovation. But let’s not waste resources doing what the other does better, and instead collaborate where possible to deliver something better than either of us could achieve on our own.”