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NetDania

The best alternative to expensive legacy systems for trading, news and analysis

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TTMzero

Fully digitized RegTech and capital markets software solutions

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FairXchange

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Athena Systems

Workflow automations for buy-side participants

Products

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OneChart

The ultimate charting framework for desktop and mobile applications

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Social Charts

Interactive client engagement tool that engages clients in conversation internally and online

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NetStation

User-friendly information and analysis terminal, deployable in multiple roles, including trading

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Data Feeds & APIs

Multiple APIs designed to ensure low latency and minimum resource usage

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Fair Value Pricing

Independent fair value pricing for added transparency where current prices are not readily available

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Evaluated Real-Time Market Data

Independent real-time market data feeds at a fraction of the cost

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Key Figures and Risk Indicators

Precise indications of the risk and return probabilities for financial products

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Financial Instruments Automation Platform

Reliable and cost-effective digitization process for securities and OTC trades

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Liquidity Management

Unparalleled insight into your trading with data visualization

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Spark OMS

Highly flexible Investment Management System

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Spark Risk

Manage your risk needs on a central platform

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August 26th 2022

3 min read

Digitization in Banks and Embracing Innovation is Getting More Challenging

Christian Frahm

The barriers for banks wanting to onboard innovative fintech solutions are increasing at a time when innovation within these institutions is needed more than ever before. Christian Frahm, Founder & CEO, United Fintech, shares his insights from discussions with investment banks, large financial institutions and fintechs about the current challenges they face in order to accelerate digital transformation.

At United Fintech we talk to investment banks and large financial institutions all the time – we have a great deal of insight from clients and prospects about the challenges they are facing in terms of digitization, particularly in capital markets. We also get approached each week by about 5 or 6 fintechs specializing in capital markets who are seeking investment because of the financial and operational pressures they are facing.

It is tougher for the fintechs to operate in this space than ever before and it is tougher for the banks to onboard innovative fintechs – even though they know they need to if they are going to innovate. However, the internal barriers at banks are increasing…and you can understand why.

The banks want to drive things forwards. They want to embrace the latest technologies from the most innovative fintechs around the globe. They know that it is only by doing this that they will be able to compete with challenger banks and large technology companies that have entered the financial services sector. They have a very strong focus now on projects and products which will either save them money or make them money in the short-term. However, the onboarding processes in place can significantly slow things down and, in many cases, are actually pushing innovative fintechs away.

Digital transformation in banks

We regularly hear about onboarding times of 18 months to 2 years to engage a fintech. The process is taking longer than ever before, and there are more and more requirements than ever before, with more demands from compliance. Aware of this situation, many fintechs can’t afford to waste their time on this process. It’s too costly to their businesses. They simply can’t meet cash flow demands if they need to wait for such a long time to be onboarded before they generate revenue.

However, from what we are seeing from the fintech community, there’s another huge issue to add to the mix: scalability. It is now increasingly difficult for the most innovative of fintechs to get the investment needed to scale their businesses in order to make them suitable for global banks. Even fintechs that managed to secure contracts with banks about 18 months ago are struggling to raise money. The harsh reality for these organizations is that, having received their contracts and fulfilled the required terms 18 months ago, they are now ready to be onboarded and have simply run out of money to deliver their agreed solution at scale. We have even been contacted by fintechs who have been onboarded already and have thousands of users on their platform but don’t have the money needed to scale. This type of scenario is not uncommon. Banks are then faced with the issue of having to untangle these solutions – and it is this situation that is making the banks wary of onboarding fintechs.

Understandably, this has a knock on effect. The banks want to deal with the bigger fintechs and they need to raise their thresholds in order to protect themselves.

Given the current investment climate, the situation isn’t likely to change. But the imperative for digital transformation in banks is not going away either. That’s why we believe the United Fintech business model of scaling fintechs and offering a single fintech platform to banks is more compelling than ever before. Minimal onboarding times and access to a wide range of innovative fintechs all specializing in capital markets. Banks simply can’t afford to waste any more time. They need to act quickly and embrace the innovative solutions that can help to transform and digitize their operations.

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