October 20, 2015
In one of our recent articles, we analyzed the way traditional financial industry players such as banks are interacting with dynamic and innovative FinTech startups. It may seem that Banking and FinTech are competitors, but the market reality has brought these players closer to collaboration. There is a variety of ways FinTech is partnering with banks for a better customer experience. One of the ways we looked at was a special fund for developing FinTech units within the big corporation. According to Accenture’s latest report on the future of FinTech and banking, the global investment in FinTech ventures tripled to $12.21 billion in 2014, signifying a 201% global growth compared to the previous year.
Citigroup demonstrated dedication to collaboration and superior customer experience with the recent announcement of setting up a new FinTech unit in its global consumer bank to focus on mobile banking. Heather Cox, who oversaw digital banking and client experience, will run the Citi FinTech team within the consumer bank. Citi FinTech will recruit employees internally and externally who will work collaboratively on cross-functional teams.
The new FinTech unit is a response to the growing demand for mobile services. "Making our existing business compatible with a Mobile First future is critical," said Global Consumer Banking Chief Executive Stephen Bird in a note.
"The world's consumers have converted to mobile and competitors are everywhere," said Bird. "We must act boldly to prepare our business for this new environment and the future opportunities of an 'always on' world. Today, we are taking a bold step in the Revolution of our business model."
Perhaps, the new lane of business development came about because of the negative financial results in the financial statement published by Citigroup. Net revenue in the first 9-month period in 2015 in comparison to 2014 went down by 2%. Total assets, total liabilities and equity went down by 4% each. While Industrial Clients Group financial results were positive (2% growth), the Global Consumer Banking had a decline of 5%.
Summarizing the overall financial results, the total net revenue of Citigroup went down by 2%. The negative tendency in financial results can get even deeper if banks do not modernize their business models. Citigroup is one of the largest banks that is catching up on innovation to improve the business and benefit from the modern trends.
Without a doubt, banks can benefit from collaboration with FinTechs and vice versa. Citibank with its FinTech unit joined the set of global banks who realize the necessity of sharing the capabilities and experience in synergistic relationships. Among other examples are BBVA, Commerzbank, Deutsche Börse, UniCredit, Bank of Ireland, EY, Deloitte, Lloyds Banking Group, Bank Leumi, Erste Group, etc. As traditional banking giants and innovative FinTech startups develop an understanding of the common goal of serving the customer in the best way possible, more and more collaborations will be found among both the parties.