# How can traditional banks deliver game-changing innovation in the digital age?
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2020-01-16
Category: BANKING
Category URL: https://financedigest.com/category/banking
Meta Title: How Open Banking and Fintech are Revolutionising the Future
Meta Description: Discover how non-banks are revolutionising the finance sector with innovative technologies, competitive pricing, and smart partnerships. Stay ahead of the game!
URL: https://financedigest.com/how-can-traditional-banks-deliver-game-changing-innovation-in-the-digital-agehtml

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_By **Jake Ranson**, Chief Customer Officer at Freedom Finance_

Trends in finance, from Open Banking to the rise of fintech start-ups, are shaking up the industry and putting customers at the heart of the future of banking. With an increasing number of challengers joining the market, competition for the customer is at an all-time high and non-banks have a number of strengths which help them to attract and retain new customers.

**Technology and the [speed of adoption is key](https://www.financedigest.com/vehicle-speed-monitoring-system-market-key-players-swot-analysis-key-indicators-and-forecast-to-2026.html "Vehicle Speed Monitoring System Market Key Players, SWOT Analysis, Key Indicators and Forecast to 2026")**

![Jake Ranson](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/jake-ranson-450x563-1736838955843-compressed.jpg)

Jake Ranson

Transparent and competitive pricing has been used to bring significant disruption to several [markets including](https://www.financedigest.com/title-interventional-pulmonology-market-shows-huge-demand-and-future-scope-including-top-players-2031.html "Interventional Pulmonology Market Shows Huge Demand and Future Scope Including Top Players 2031") banking, FX and savings. Digital only platforms have also driven speed of adoption and the ability to expand into new [geographical markets](https://www.financedigest.com/marine-base-steering-gear-market-notable-developments-geographical-outlook.html "Marine Base Steering Gear Market: Notable Developments & Geographical Outlook") quickly. Revolut is one example of a company leveraging these advantages to great effect, expanding quickly into all the EEA countries, Switzerland, Canada, Singapore, the US and Australia.

Non-banks don’t have the legacy of the incumbent banks’ infrastructure, which means they can be more efficient, and often, they have the most up-to-date [technologies to gather customer and market insights](https://www.financedigest.com/nutragenomics-market-overview-forthcoming-technologies-future-trends-latest-insights-by-share-outlook-till-2022-2029.html "Nutragenomics Market Overview, Forthcoming Technologies, Future Trends, Latest Insights By Share, Outlook Till 2022-2029").This allows them to successfully break through the traditional finance market because they understand what their [customers value](https://www.financedigest.com/the-value-of-customer-centricity-to-c-suite-financial-strategy.html "The value of customer-centricity to C-Suite financial strategy"), and equally care less about, so have the dexterity to deliver new features quickly within an engaging UX. Banks are increasingly looking to copy the formulas used by the fintechs – but as adjacencies to their core business, such as Bo, RBS’s [challenger bank](https://www.financedigest.com/big-bank-ceos-to-sell-lawmakers-on-relief-diversity-efforts-amid-economic-regulatory-challenges.html "Big bank CEOs to sell lawmakers on relief, diversity efforts amid economic, regulatory challenges") brand – rather than reform their legacy brand propositions.

Open [Banking and PSD2 standards have also led to the creation of new technologies](https://www.financedigest.com/transforming-the-retail-banking-ecosystem-its-all-about-technological-innovation.html "TRANSFORMING THE RETAIL BANKING ECOSYSTEM: IT’S ALL ABOUT TECHNOLOGICAL INNOVATION") that allow third parties to safely and securely access customers’current account data at their request. [Digital banking](https://www.financedigest.com/key-considerations-for-building-an-inclusive-digital-banking-experience-fit-for-the-future.html "Key considerations for building an inclusive Digital Banking Experience fit for the Future") makes life easier for consumers and people are increasingly enjoying the simplicity of managing all their finances in one place. This means there’s a big [opportunity for more fintechs to plug into traditional banks](https://www.financedigest.com/how-partnerships-between-fintech-start-ups-and-traditional-banks-herald-a-brave-new-world-of-opportunity.html "How partnerships between FinTech start-ups and traditional banks herald a brave new world of opportunity") and build new services that are useful for customers.

**Partnerships are becoming common**

To compete with non-banks, we are [seeing more traditional banks](https://www.financedigest.com/europes-banks-brace-for-russia-fallout-while-u-s-banks-see-limited-pain.html "Europe’s banks brace for Russia fallout while U.S. banks see limited pain") forming partnerships with smaller, specialist fintechs. These [partnerships have a huge value](https://www.financedigest.com/are-you-getting-full-value-from-your-outsourcing-partnerships.html "Are you getting full value from your outsourcing partnerships?") as they allow incumbents to harness and infuse talent which isn’t on their payroll. It also enables them to utilise and onboard [technologies that would otherwise take months to develop](https://www.financedigest.com/nano-one-awarded-10-million-from-sustainable-development-technology-canada.html "Nano One Awarded million from Sustainable Development Technology Canada"), thus giving them greater ability to understand and personalise their proposition. This leads to fewer [abrupt endings](https://www.financedigest.com/exclusive-germany-prepares-crisis-plan-for-abrupt-end-to-russian-gas-sources.html "Exclusive-Germany prepares crisis plan for abrupt end to Russian gas – sources") for perennially underserved groups.

To [remain competitive in this market](https://www.financedigest.com/tissue-tapes-market-remains-afloat-amid-covid-19-pandemic-to-surge-positively-projects-fmi-2019-2029.html "Tissue Tapes Market Remains Afloat amid COVID-19 Pandemic, to Surge Positively, Projects FMI 2019 – 2029"), banks need to enhance what they have available to them – taking stock of their strengths and outsourcing where appropriate. This isn’t to say that incumbent [banks can’t](https://www.financedigest.com/why-banks-cant-adopt-digital-identities-fast-enough.html "Why Banks Can’t Adopt Digital Identities Fast Enough") build it, but if a fintech already has it, it makes sense to use this to their advantage. Therefore, [success will very much rely on smart partnerships](https://www.financedigest.com/impact-com-releases-the-partnership-economy-a-new-book-that-guides-businesses-to-success-in-a-digital-world.html "impact.com releases The Partnership Economy, a new book that guides businesses to success in a digital world").

**What will separate the most** [successful banks?](https://www.financedigest.com/enabling-decision-making-success-in-the-banking-industry-3-considerations.html "Enabling decision-making success in the banking industry – 3 considerations")

We see a lot of customers start their Freedom [Finance journey having already been declined by a bank](https://www.financedigest.com/embedded-finance-is-the-new-norm-in-banking-but-what-is-needed-to-unleash-its-full-potential.html "Embedded finance is the new ‘norm’ in banking, but what is needed to unleash its full potential? "), but then go on to secure a loan that’s affordable and right for them – simply because the bank wasn’t able to accurately interpret the customer’s capacity to borrow. These customers tend to fall into pretty well-defined segments: the young, those establishing themselves in the UK, the self-employed and [people](https://www.financedigest.com/people-dont-like-to-be-told-no-when-it-comes-to-finance.html "People don’t like to be told no when it comes to finance") recovering their financial stability after an event, or income shock.

[Traditional banking](https://www.financedigest.com/digital-banking-traditional-banks-vs-fintech-providers.html "Digital banking: Traditional banks vs. fintech providers") decision systems may be large enough to securely process millions of transactions, but they can be quite ‘one size fits all’ and turn away customers who don’t exactly fit their mould.The banks that manage to address this will stand a better chance of [future success](https://www.financedigest.com/digital-democratisation-through-low-code-the-future-of-finance-success.html "Digital democratisation through low-code – the future of finance success").

The modern finance market has become crowded with options and choice, and [customers often lack sufficient support](https://www.financedigest.com/why-now-is-the-time-for-banks-to-use-their-data-to-support-customers.html "Why now is the time for banks to use their data to support customers") and guidance. What’s most worrying is the knock-on effect this is having. Our research shows that more than a third of us regularly delay or give-up on making important decisions around our finances, such as consolidating [credit cards](https://www.financedigest.com/what-happens-to-credit-card-debt-when-you-die.html "What happens to credit card debt when you die") or loans or switching to a more competitive mortgage rate. The cost of this paralysis can be up to a staggering £1,598 per adult.

Rather than benefitting from a healthy and competitive financial [services market](https://www.financedigest.com/car-rental-service-market-is-forecasted-to-grow-at-a-7-2-cagr-by-2031-comprehensive-research-report-by-fmi.html "Car Rental Service Market is forecasted to grow at a 7.2% CAGR By 2031- Comprehensive Research Report by FMI"), consumers are often being blinded by choice and in too many cases it’s making their financial situation worse. This is particularly apparent in the loan market, but we also see it in savings, pensions and other investments too.

For banks looking to succeed, it is imperative to strive to offer customers clarity, not just endless choice. Using the right blend of [technology and human support](https://www.financedigest.com/uk-launches-270-million-pound-fund-to-support-green-heating-technology.html "UK launches 270 million pound fund to support green heating technology") will make these important decisions easier and clearer.


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