# US banks rely on Fintech firms to overcome legacy systems
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2018-01-13
Category: BANKING
Category URL: https://financedigest.com/category/banking
Meta Title: Legacy Systems Hinder US Banks from Developing Fintech Apps
Meta Description: Research by Fraedom shows 64% of US banks face obstacles in developing Fintech apps due to legacy systems. Discover attitudes towards outsourcing and
URL: https://financedigest.com/us-banks-rely-on-fintech-firms-to-overcome-legacy-systemshtml

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Legacy systems are preventing nearly two thirds (64%) of US commercial banks from developing Fintech applications, research commissioned by Fintech provider Fraedom has revealed.

Interestingly, 82% of the respondents that highlighted this concern were shareholders. Over half of those polled also noted a lack of expertise within banks as an important concern (56%), just ahead of limited resources (53%).

The study included decision-makers in commercial [banks](https://www.financedigest.com/pragma-investments.html "Pragma Investments on Wealth Management versus Private Banking") including shareholders and senior managers as well as middle managers.

Commercial banks outsourcing services to a [Fintech provider is clearly a trend](https://www.financedigest.com/investing-in-fintech-trends-how-to-get-started.html "Investing in Fintech Trends: How to Get Started") on the rise, with only 22% of US banks revealing that they do not outsource any payment services compared to 30% of their UK counterparts.

Kyle Ferguson, CEO, Fraedom, said: “This research highlights that legacy [systems are standing in the way of US commercial banks developing Fintech applications](https://www.financedigest.com/turbo-compounding-systems-market-development-status-competition-analysis-type-and-application-2026.html "Turbo Compounding Systems Market Development Status, Competition Analysis, Type and Application 2026"). This in turn is [resulting in certain services such as commercial card and expenses being outsourced by more than three quarters of banks](https://www.financedigest.com/polands-bank-millennium-third-quarter-results-hit-by-payment-holidays.html "Poland’s Bank Millennium third-quarter results hit by payment holidays"). It is now recognised that Fintech firms can help [banks overcome](https://www.financedigest.com/how-can-banks-overcome-the-tech-trust-gap.html "How can banks overcome the tech trust gap?") these technical issues and benefit from previously untapped revenue-making opportunities.”

The [research also discovered a growing inclination among commercial banks to partner with Fintech firms](https://www.financedigest.com/lyme-disease-treatment-market-forecast-to-2031-made-available-by-top-research-firm.html "Lyme Disease Treatment Market Forecast to 2031 Made Available by Top Research Firm"). The main reason for this shift is to help bring new [products to market](https://www.financedigest.com/dry-molasses-products-market-overview-in-depth-analysis-of-market-size-growth-industry-overview-2022-2029-2.html "Dry Molasses Products Market Overview In-depth Analysis of Market Size, Growth, Industry Overview 2022-2029") faster, as recognised by 94% of respondents.

The second most popular reason given for partnering with a [Fintech was that to attract ‘new customer](https://www.financedigest.com/how-fintech-aids-financial-inclusion-and-helps-customers-through-crises.html "How Fintech aids financial inclusion and helps customers through crises") segments’ supported by 82% of respondents, followed by 76% who said it was to help ‘differentiate themselves from competitors’.

“US banks are beginning to see the rewards of partnering with a [Fintech provider, especially when helping to bring products to market faster.” Ferguson added: “Established Fintech firms can understand the technical challenges that banks are struggling to cope with in local markets and provide an easy yet very effective solution](https://www.financedigest.com/why-a-liberated-cfo-and-fintech-solution-are-a-dream-partnership-for-navigating-economic-uncertainty.html "Why a liberated CFO and fintech solution are a dream partnership for navigating economic uncertainty") while often differentiating them from their customers.”


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