By: Andries Smit, CEO and Founder, Upside
The powers of telco and fintech are finally merging. A new ecosystem of financial services is being developed as we speak among non-financial businesses. And it’s led by the telecoms industry.
The Rising Trend of Telco/Fintech Partnerships
The rapid growth of the telco and fintech sectors has driven these new mutually beneficial partnerships to occur. The partnerships are creating new revenue opportunities in both sectors as well as helping businesses meet soaring consumer demand, as they increasingly want more frictionless and tailored services and a better customer experience.
The collaboration of telcos and fintechs is transforming access to financial services through innovation and efficiency and helping to improve financial inclusion globally. A recent success story in this space is the Upside and Tribe Mobile partnership which aims to help 9 million overlooked UK adults get access to a mobile contract that bigger networks won’t give them.
This partnership addresses the need for universal communication and accessible financial services provided by modern technology. The shared expertise of both sectors colliding will allow for further innovations, customer-driven value, and enhanced risk mitigation from which consumers can only benefit.
The Issues the Two Sectors Currently Face in Improving and Expanding Their Reach
Despite the huge value gained through these partnerships, we must also acknowledge the issues they are helping to solve for both fintech and telco companies. The telco industry has reached a level of saturation and so companies are trying to find new ways to maintain their reputation as market leaders, whilst maintaining a competitive edge.
Telcos used to be known for being highly transactional businesses. However, due to increased competition, the sector has had to come up with new ways to expand its operation and develop a robust structure to ensure they remain relevant. Telco companies that use outdated business systems are unlikely to keep up with consumers that are increasingly focused on convenient digital services and technologies, making it difficult to improve and expand their reach and long-term objectives.
In the same breath, fintech has brought about a big technological change and has disrupted various business verticals. Fintech has arguably replaced many traditional financial methods as well as innovating in others to bring banking services to non-bank sectors, like retail. However, most fintech companies are start-ups, which means some may need to rely on the right partnerships to allow them to scale their technology and access the capital and markets they need for growth and to build loyalty.
Despite the issues the sectors may have as their own separate entities, both sectors have common pursuits that are intrinsically linked to providing consumer-centric services. This has been even more ideal for helping the sectors adapt to the current economic conditions as well as the rise of a cashless society and the emergence of new financial assets like cryptocurrency.
How Can Telco Companies Benefit from a Fintech Partnership and Vice Versa?
Telcos partnering with fintech has proved to be a winning collaboration as they can improve their product offering as well as retain their digitally savvy customers and diversify revenues.
As the digital payment segment is increasing rapidly, the opportunity for telco businesses to integrate with fintech companies has allowed telcos to harness their customer’s data and use it to offer personalised finance-related products. Along with this, fintech companies can track customer-oriented metrics which will later help telco companies to improve their range of product offerings.
For fintech businesses, these partnerships provide an opportunity to gain a wider customer base with a telco offering an incomparable customer reach and universal accessibility in both rural and remote areas.
What Does This Mean for the Customer Experience?
The fusion of the two industries provides several mutual industry advantages. However, how consumers benefit from these commercial mergers is of equal importance. In our recent white paper, The Tipping Point of Loyalty, I noted that the battle for consumers’ time, attention, and loyalty is fiercer than ever before. Customers demand more and more, and the new telco and fintech mergers are a product of this.
From the customer perspective, the main advantage is the opportunity to be immersed in new product offerings such as free current accounts, higher interest rates on savings accounts, and cashback features for mobile payments. These are just a few examples of how telcos can bring new value to their customers by merging with a fintech brand. Greater convenience is also on offer as with fintech support, telcos can add financial products to allow customers to purchase, manage and track their payments from one main place.
What Can We Expect and Predict for Future Telco/Fintech Partnerships?
The telco and fintech revolution is already well underway. The rising trend of these partnerships will continue to be a symbiotic relationship for years to come. As partnership numbers grow and technology continues to advance, the integration of businesses and services will help both sectors grow exponentially and drive exciting innovations.
Fintech is an enabler, and I look forward to seeing the opportunities created through these partnerships that are undoubtedly designed for the modern, digital world. Only time will tell exactly where the telco and fintech sectors will go from here, but I have no doubt this collision is one that will benefit millions for years to come.