While Kathy Harkey was out at the Payments Innovation Conference in San Francisco last week, she had the opportunity to sit in on the session “Fintech Debate: Friend or Foe?”. A lively discussion ensued over the merits of Fintech serving or displacing banks in providing technology services to the consumer and business customers. While there is no doubt Fintech companies have a real potential to displace the stronghold banks have had on their transactionally-oriented technology solutions, there is a case for Fintechs to help banks rise to new heights with advanced technology solutions.

During the discussion panelists advised banks to avoid hunkering down and building walls to try to protect existing business. Further, banks trying to build compelling new technology using only internal development resources are a serious risk of falling behind and being displaced by Fintech disruptors. An example cited by the panelist was Venmo.

Panelists also debated the effect of heavy regulation has on bank’s ability to deploy new technology or business models. It seems Fintech companies may have an unfair advantage in the current regulatory environment, presenting a challenge for banks trying to level the playing field. However, it was stated that 8 out of 10 fintech companies see the value in regulation and need the banks help to better understand regulatory implications.

In conclusion, panelists agreed banks and other financial institutions should seek out technology providers that are doing interesting things and find ways to work together. And Fintech’s should embrace banks as powerful business partners, bringing stability, control and accountability to emerging technology. Collectively the power of a bank/fintech partnership is very strong and offers business and consumer customers the best of both worlds…innovative technology delivered through a trusted banking relationship.