Essay on Appropriate Strategy for a Financial Institution to Apply Regarding Fintech

Published: 2021-07-05 17:38:02
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University/College: 
Vanderbilt University
Type of paper: 
Case study
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The rise of the financial technology industry has experienced various startups and established financial technology companies. For financial institutions to remain in business, they have to put critical strategies in place. First, they must cultivate a winning team that can thrive in the competitive landscape. The employees should be knowledgeable on the core business, its measurements, and its operations. This can be achieved through regular training and information sharing. Secondly, financial institutions should modernize branch strategy and modify their physical presence. These would be captivating for customers as well as improve their experience. Thirdly, it will be difficult to ignore the digital community which is convenient and trending. Financial institutions board, executives, and staff should embrace the new digital paradigm

A financial institution should also start partnering with established Fintech companies and startups that will help scale expertise and make sure that the institution evolves with the trend. However, it is important to identify a Fintech that matches the institutional needs and move together towards a joint venture after meeting certain metrics. The other strategy is to take the right action to match the better, faster and more convenient Fintech solutions. According to Eric Ries on The Lean Startup, it is important to establish minimal viable product. Financial institutions should start offering cheap, fast and more streamlined solutions to the problem in the industry and later take action according to the customer response. This strategy would allow for test modification of processes, products, and new ideas while at the same time understanding the stakeholder's trend.

Costa considerations

Costa considered four choices which included doing nothing, acquiring a Fintech firm, overhaul the bank s current IT and strategy to become a Fintech company or partner with Fintech companies to create an ecosystem for customers. However, to determine which option was the best, it becomes critical to identify both the advantages and disadvantages of each option.

Doing nothing

Pros

It is a cheap and simple option to take.

Cons

It is expensive at long-term as old models are labor intensive

The institution would face high competition and lose clients

Acquire Fintech firms

Pros

The institution would achieve higher competing standards.

It will increase clients satisfaction

It is time conscious and efficient

Cons

It is expensive to acquire an established Fintech

It may flop as it has not been tested before in the institution

Convert current IT and strategy to become Fintech company

Pros

Will incorporate the companys features and experience

Is cheap compared to acquiring a Fintech company

It is simple to apply it the institution activities than acquiring a new Fintech.

Con

Ma be affected by the company bureaucracy

It is time-consuming

Partnering with Fintech companies to serve customers

Pros

It is cost effective

It can serve various dynamic markets by using different partners

It is simple to partner and run

Cons

Client privacy and security is at risk

Costas likely recommendation

The best option would be determined by how it is cost effective, efficient, simplicity and consideration of future trends. For this reason, Partnering with Fintech companies to serve customers would be the best option for both the company and the clients being served. This option will be able to help the institution move with the trend, invest in tools that improve efficiency and increase scale, identify the best Fintech partner in the market and be able to test new technologies and services that fit the clients in the changing banking industry.

Work cited

Ries, Eric. Lean Startup: Schnell, risikolos und erfolgreich Unternehmen grunden. Redline Wirtschaft, 2014.

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