Fintech
Banks learn to be selective with fintech payment solutions
Banks in Asia-Pacific that are building their own super apps are becoming more selective in choosing which fintech payment solutions to offer on their platforms to improve customer experience.
One reason is that while third-party payment solutions may be cheaper and easier to integrate into their super apps, fintechs may have limited capabilities in handling the huge volume of payments that come through these solutions.
A super app is a mobile or web application that can provide multiple services, including payments and instant messaging, to banking customers to enhance their customer experience. Such services, which the user can access using their mobile phone or computer, are faster, cheaper and available 24 hours a day.
“We have noticed a trend that banks will initially opt for a fintech payment solution because it is very cheap and the integration is simple. And then they realized that the amount of payments, the total aggregate payment, that goes through that fintech exceeds its capitalization,” says Winne Chen, head of treasury services, Asia-Pacific, at BNY Mellon, which provides solutions payment exclusively for banks. serve its corporate and consumer customers.
Another reason is that compliance issues may arise when trying to resolve disputes over specific payment transactions.
“If the beneficiary claims they did not receive the money, the case resolution experiences with the fintech may not be at the same level as those of the banks, especially when it comes to compliance aspects, sanctions and everything else. Beneficiaries may find that their experiences are different than working with banks,” explains Chen.
Unlike most fintechs, banks are well-regulated entities that are governed by strict regulatory frameworks, so they must ensure that the payment solutions offered on their super apps can meet regulatory requirements and provide the best customer experience.
In the case of BNY Mellon, it proactively shares industry trends and best practices with banks that use its payment solutions in order to keep them well informed and educated on data-driven solutions, compliance, etc.
“Every time we have a new innovation, we bring it to our own [bank] customers to share and understand trends. So, these are things that they probably don’t experience from companies like fintechs,” says Chen.
Indeed, fintechs and banks are engaged in intense competition to provide payment and cash management solutions to consumers, whose needs are also evolving. BNY Mellon sees itself as competing with fintechs in providing treasury solutions but, unlike fintechs, it is also a bank with matching banking capabilities.