Banking 30 May 22

Disrupt the disruptors; embrace tugboats

Natalie Schonken
By: Natalie Schonken
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Whenever a large ship needs to turn quickly or make safe harbor - they call in the tugboats. Agile but powerful, tugboats are able to maneuver the ship in the right direction and safely avoid obstacles and hazards. In this analogy, banks become the large ships, and fintech solution providers are the niche specialist tugboats - imagine fintechs plugging in to help banks overcome challenges derived from today’s higher levels of customer expectations, ever-tightening regulation, and increased competition.  

While digital technology has lowered the barriers to entry into the sector, with challengers and payment platforms attracting millions of customers - how do banks build a competitive advantage?  According to a recent McKinsey survey, half of all financial-services companies currently rank business building as a top-three priority. This is an 18% increase compared to a similar survey conducted two years ago.

Banks have the capital, resources, and expertise to turn the tables on new entrants and launch digital offerings of their own. But do they have the time? Take HSBC (then Midland Bank), who in 1989 built First Direct in-house over several years, becoming the first UK bank providing a 24-hour internet and mobile-based banking service. 

An accelerated disruption strategy could include tapping into multiple specialist Fintech ecosystem providers who collaborate to provide niche tech and digital capabilities or operating models required to grow and build new solutions. Currencycloud has helped challenger banks get to market quicker than ever before, and we’re helping traditional banks do the same. 

Banks building a new digital business or offshoot is increasingly seen as an effective way to grow. Decoupled from the risk adversity and legacy tech stack of an incumbent, and benefiting from the agility of a startup, the new business should be able to pursue growth opportunities faster than its parent. We’ve already seen examples such as:

  • Low cost cross-border payments and multi currency wallets

  • Digital-asset or crypto exchange or Wealthtech platforms

  • Vertical offerings in healthcare, housing, mobility, or e-commerce with seamless payments enablement and embedded lending

  • An ecosystem serving SMEs with a bank account linked to services such as one-stop accounting, invoicing, and bill payments 

  • Co-branded or white-label point-of-sale or “buy now, pay later” offerings

Standard Bank (a Currencycloud client) realized this approach with the launch of Shyft, its own Fintech offering cross-border transactions. In a recent interview with the Co-founder of this offshoot, Arno von Helden cites his own experience with intrapreneurship (where an employee starts a business that falls within their larger corporate structure) as being a highly effective approach.

“We were able to create a Fintech business within a large corporate institution,” he said. “Although it belongs to a larger institution, we very much feel like owners of the business.” 

Fintechs themselves understand the need to partner with other agile best-in-breed innovators. For example, in 2021 banking-as-a-service startup sync. partnered with financial connection platform Integrated Finance, Currencycloud and card issuer Transact Payments Limited to build a super-app. Working together they achieved sync.’s vision of customers being able to instantly access and manage all their accounts across different banks, within a single app. This complex project was completed in just two months. 

Just like tugboats, the niche expertise of fintechs, can form partnerships for business building - delivered to market quickly and delighting customers with great user experiences - so banks can be empowered to sail on, full speed ahead. 

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Natalie Schonken
By: Natalie Schonken
Through a genuine passion for what she does, Natalie is inspired by innovation and technology, and pushing the boundaries of capabilities, channels and the platforms available to drive an enhanced customer-centric experience. Natalie has over a decade of experience in marketing in financial services - including private banking, lending, corporate FX and asset management. At Currencycloud she covers go-to-market activation within the EMEA banking segment.

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