Fintech and Bank Collaboration Key to Reversing Disintermediation Trend, Aite-Novarica/BNY Mellon Report Finds

Rhea-AI Summary

BNY Mellon, in partnership with Aite-Novarica Group, released a report titled The Forces Disrupting Payments, which highlights the disintermediation trend affecting banks as businesses increasingly turn to fintech providers for payment solutions. The survey revealed that 62% of businesses are already working with fintechs, while only a third feel their banks understand their payment needs. However, businesses prefer partnering with banks rather than relying on fintechs directly. The report underscores significant investments by 87% of businesses in payment technology, indicating growth opportunities for both fintechs and financial institutions.

Positive

• 87% of businesses have invested significantly in improving payment technology, indicating demand.
• The preference of businesses to partner with banks instead of fintechs suggests a potential for banks to regain market share.

Negative

• 62% of businesses currently work with fintechs, highlighting the risk of disintermediation for banks.
• Only one-third of surveyed businesses believe their financial institutions understand their payment needs.

NEW YORK, Oct. 10, 2022 /PRNewswire/ -- BNY Mellon, in collaboration with Aite-Novarica Group, today released a report finding that financial institutions (FIs) servicing business clients are being disintermediated by fintech payment providers. But it also found that banks are slowing the trend by partnering with larger banks who have already built connections to fintechs.

The report – The Forces Disrupting Payments – showed that banks, community banks and credit unions continue to be at risk of disintermediation – when businesses circumvent their banks by engaging directly with fintechs – with only a third of businesses surveyed believing their FIs fully understand their payment needs. In fact, 62% of the business respondents said they are already working with a fintech provider.

Overall, however, businesses said that they would rather partner with another bank than have to seek third-party fintech providers. Smaller banks, in particular, are finding it beneficial to partner with larger FIs that have already vetted and validated the numerous fintech payment options available.

"Banks need to solve for points of friction as their business customers show a greater expectation for robust, real-time capabilities," says Isabel Schmidt, Co-Head of Global Payments at BNY Mellon. "Our experience is that clients who partner with financial institutions that are connected to fintechs and their capabilities stand a greater chance of success."

"The threat of disintermediation is the impetus for a lot of innovation among banks as they collaborate with fintechs on new ways to drive growth," says Erika Baumann, author of the report at Aite-Novarica Group. "This leads to a market opportunity for fintechs, as well as FIs that have reacted to market demand by developing robust services to fill the biggest gaps in their payment strategies."

The report also reveals that 87% of businesses have made significant or somewhat significant investments in improving their own organization's payments technology or processes. Despite this, those still planning to make an investment is still very high (88%), presenting an abundance of market opportunities for fintechs and FIs who, together, come to market with effective, comprehensive payment services that can cater to a spectrum of client needs.

The findings of the report – produced in collaboration with Aite – are based on feedback from a survey of 790 employees of midsized and large organizations in seven North American and European countries.

ABOUT BNY MELLON

BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment and wealth management and investment services in 35 countries. As of June 30, 2022, BNY Mellon had $43.0 trillion in assets under custody and/or administration, and $1.9 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.

Contact:      
Nina Truman
nina.truman@bnymellon.com 
+1 212 815 2006

 

View original content:https://www.prnewswire.com/news-releases/fintech-and-bank-collaboration-key-to-reversing-disintermediation-trend-aite-novaricabny-mellon-report-finds-301644405.html

SOURCE BNY Mellon

FAQ

What does the BNY Mellon report on fintech and banks discuss?

The report discusses the disintermediation trend affecting banks as businesses increasingly engage fintechs for payment solutions.

How many businesses feel their financial institutions understand their needs according to the BNY Mellon report?

Only one-third of surveyed businesses believe their financial institutions fully understand their payment needs.

What percentage of businesses are currently working with fintech providers?

62% of businesses reported that they are already working with a fintech provider.

What market opportunities does the BNY Mellon report highlight?

The report highlights growth opportunities for both fintechs and financial institutions as businesses invest in payment technology.

What is the main threat to banks mentioned in the BNY Mellon report?

The main threat is disintermediation, where businesses choose fintechs over traditional banks for payment solutions.