Why can't banks survive without fintech?

Author: Alpamys Darkenbayev

Managing Partner Dasco Technology

20200221

At the moment when high-tech gurus and science Influencers started talking about the decline of the banking system, the banks themselves began to deeply analyze the situation and try to avoid a major crisis.

First of all, they have recorded the loss of their monopoly on traditional banking services such as payments and transfers. Non-financial technology organizations have literally burst into this once closed sector and accelerated payment mechanisms many times over. As recently as yesterday, concepts such as artificial intelligence, Big Data, biometrics and robots seemed to bankers like toys for young start-ups. Today, the strong cyber hand of the Silicon Valley has already begun to take billions of dollars out of banks' pockets.

Bankers are pragmatic people and know how to admit mistakes. They know the old Machiavellian wisdom: If you can't stop the process, lead it. Thus began the era of banks merging with technology companies. This partnership has resulted in breakthrough products: mobile banking, online payments, transfers and loans, P2P currency exchange, cloud cashiers, smart terminals and robo-advising.

The global digitalization of banking is happening rapidly right in front of our eyes. By the end of this year, experts expect that 50% of bank clients around the world will be mobile banking users. More than 80% of financial institutions are planning to increase the number of partnership projects with fintech companies. About 60% of financial institutions have identified digital transformation as their main strategic goal.

Against this background, global investments in fintech startups are growing at an incredible rate. Whereas in 2013 it was only $4 billion, in 2018 it was more than $40 billion. Last year this amount dropped to $34.5 billion, but the funds were distributed more evenly among companies.

It is worth noting that Kazakhstan's banks also promptly managed to adapt to the technological wave and create competitive electronic products. Microtransaction systems, albeit requiring fine-tuning in terms of tax control, are evidence of this. But this is a separate topic for discussion.