The FinTech Agent Who Came in From the Cold

04/14/2015 09:46 am ET | Updated Jun 11, 2015

The FinTech Agent will change many things.

One of my previous financial industry innovation proposals, the "FinTech Supermarket," was about the possibility of an open selection of the best fintech partners. In other words, a client offering the best financial package of financial services under one roof.

In my new proposal, I will introduce the "FinTech Agent," who will compare fees and services of banks, particularly countless fintechs, and thus ultimately achieve better fee conditions for customers.

Fees are one, if not the most important, bastion of traditional banks' business models, and they are already under attack by ETF popularity and fintechs.

This new agent business model is a new business innovation, a kind of intermediate system. It is intended to provide customers not only the best fintech services and, therefore, the most experienced service partners, but also partners with the best price-performance ratios.

Thus, the customer will receive proposals and ways to renegotiate the fees they get charged or at least receive better terms, from the agent. The agent's business strategy will be "A Game Changer" since it will leverage the impact of the fintech industry.

In the insurance industry, it is common for insurance brokers to compare suitable offers for clients and then put together an optimum package. Moreover, there are already fintechs who negotiate better bank and insurance fees for their clients but only for their own customers.

In contrast, the FinTech Agent will analyze all matching fintech services and prices on the market with all the services of eligible banks, evaluate the findings, and then offer a perfect deal to the client.

The agent will thus create a whole new market with an increasing range of services for all parties - customers, fintechs, and banks - that will lead them all sooner or later to better services, price-performance ratios, and competitiveness.

Customer will benefit from:

  • Lower fees and, thus, higher returns and savings.

  • More choices of best-in-class financial services.

  • Better price-performance ratios.

Banks will benefit from:

  • Faster adaptation of new digital services and technologies.

  • Higher competitiveness and increased survivability through an adapted business model.

  • Strengthening of future prospects and brand.

Of course, it should be noted that the advance of a new services industry like the FinTech Agent will bring changes that can also be very painful for many participants. It will also stabilize the income of the financial industry at a lower level through the greater competition and the associated pressure on profit margins.

To meet this trend, financial institutions must provide a clear added value and unique customer experience to keep margins high. Apple may be considered a good future business model for the financial industry since it operates in an extremely competitive industry and still, so far, has been very successful in maintaining its high profit margins.

The trend in the financial sector cannot be undone. However, the disruptive innovation by fintech services provides better opportunities to satisfy the customer needs of today and, more importantly, tomorrow.

Fintechs are specialized and focused to adapt to the dreams and desires of customers and, therefore, are more flexible and adaptable than the big financial companies. In addition, their justification and future are always closely linked with the customers' satisfied needs and wants.

Another strong argument for the future prospects of the fintech industry is that it is not held back by the structures or politics that are found in well-established corporate cultures. Therefore, it is easier for goals to be achieved and business strategies to be executed.

Banks need to dress warmly because the structural changes are progressing steadily and quickly. The whole trend reminds me very much of the dot-com era, I have witnessed. Although many of the dot-coms no longer exist, the survivors are here to stay and have changed our lives forever.

So the fintechs will change the future of today's financial institutions and their competitors. Many will not survive; however, what is certain is that they will change all of our understanding and expectations for financial services forever and create new markets. So this is just the beginning, and it is unstoppable.

The FinTech Agent will be the powerful oil that will bring the motor of the financial industry change really up to full speed.

"Empowering innovations transform complicated, costly products that previously had been available only to a few people, into simpler, cheaper products available to many. Empowering innovations create jobs for people who build, distribute, sell and service these products."
Clayton Christensen