Fintechs & banks: who will shape the financial world of tomorrow?

Fintechs rely on technological innovations. Banks offer trust and stability. Only together can they move the financial world forward, says Dominik Schütz, Head of LBBW's Innovation Lab.

As Head of LBBW's Innovation LAB, I experience the dynamics and challenges of the constantly changing financial world on a daily basis. Fintechs have become an integral part of it: Innovative financial technology companies such as N26, Trade Republic and Mambu are among the leading financial service providers in Germany and have permanently changed the competitive landscape. I don't believe that the banks will soon be knocked off their financial throne. But I do believe that the German financial world can only benefit if fintechs and banks join forces.

Fintechs: the agile ones with the technological edge

In recent years, fintechs have established themselves as the agile, technology-driven innovators of the financial world. They are the start-ups that have no legacy burdens in the form of outdated IT infrastructures and can therefore react quickly and flexibly to changes. Their strength lies in the user experience. Examples such as N26 or Revolut show what modern banking can look like: seamless, intuitive and in line with the needs of digital customers. These fintechs offer apps that are almost playful to use and make managing finances a pleasant experience - something that many traditional banks cannot claim.

Another example is blockchain technology. While many banks are still examining how and where blockchain should be used sensibly, fintechs have already developed functioning solutions that not only make international payments faster, but also cheaper and more secure. These companies are willing to take risks and try out new technologies, which gives them a head start in the innovation race.

Not forgetting the ability to personalize. Fintechs such as Mint or Robinhood rely on data-driven approaches to offer personalized financial products and services that are perfectly tailored to the needs of the individual. They understand young, digitally savvy customers and deliver exactly what they want - often even before they know it themselves.

Banks: the fortresses of trust

But banks also have their strengths. They may not always be at the forefront of innovation, but they have something that fintechs often lack: trust and stability. Decades of experience, strict regulations and proven risk management make banks safe havens to which customers entrust their money. Trust is an invisible but immensely valuable currency - and perhaps even the most important in the world of finance.

Another decisive advantage of banks is their capital strength. They are not dependent on financing rounds and have sufficient resources to plan and implement large projects over the long term. Then there is market access. Banks have a dense branch network and a broad customer base that they have built up over the years. This reach and the trust of their customers enable them to scale new products and services more quickly and with a higher success rate.

Venture clienting - together, but with clear business benefits, please

What if we could combine the best of both worlds? This is where venture clienting comes in. For me, it's clearly the most efficient way of working with fintechs. Why? Because it is aimed directly at business success. Instead of investing capital in a start-up and hoping that it will eventually develop a marketable solution, venture clienting focuses on concrete, implementable solutions right from the start. This minimizes risk and maximizes added value - for both sides. The bank gains immediate access to the best innovations without having to bear the risks and costs of in-house development. The fintech in turn benefits from the bank's resources, allowing it to scale its solutions faster and more effectively.

In the end, the customer must win

At a time when the financial world is becoming ever faster and more digital, no bank can afford to ignore the opportunities of working with fintechs.

The future does not lie in rigid competition, but in a close, strategic alliance. Banks that position themselves as venture clients gain access to the best innovations on the market and strengthen their own position - without having to bear the risks and costs of in-house development. On the other hand, fintechs benefit from the resources, experience and trust that banks bring to the table. This combination not only creates new market opportunities, but also a win-win situation that ultimately benefits customers the most. And it will - if fintechs and banks join forces and shape the financial world of tomorrow together.


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