Author: Rafał Strzelecki, CEO CashDirector Head of Digital CFO R&D
Polish Fintechs are close to repeating the global success of the domestic video game industry – they are successfully conquering foreign markets and effectively influencing the world of finance by creating solutions tailored to individual customer needs. Their competition has to be faced by banks, which, in order to maintain the interest of their customers, expand their services with products from the field of beyond banking, i.e. value-added products.
The financial market in Poland
Poland has one of the most innovative financial services markets in the world. Due to the relative lack of the burden of “old systems” IT, banks in Poland have become Fintechs themselves and started to implement the latest available solutions and develop solutions locally. This is how BLIK was created, without which probably no-one could imagine modern payments. Poland is also a testing ground for pioneering solutions implemented by global IT companies – this is how contactless payments were implemented. We should also not forget about the “service centers” of the largest global banks, which, despite the lack of commercial operations, develop advanced and innovative solutions in many areas of banking activity in Poland. And this is due to high qualifications of the Polish staff combined with attractive costs.
According to the results of the report “Digital Banking Maturity 2020: How banks are responding to digital (r)evolution,” banks in Poland are consistently focusing on the development of non-banking services. Of particular importance are those of a commercial nature, e.g. cell phone top-ups are offered by 81% of them, and more than half give access to loyalty programs.
What is holding Fintechs back from achieving success?
As far as Polish Fintechs are concerned, they still lack recognized global brands and a strategic approach to innovation and, above all, promotion on the international arena. The venture capital industry, which is at an early stage of development in our country, is also of great importance, yet Fintechs need investment support.
It should also be noted that the financial sector is strictly regulated. It requires adjustment to local conditions, so it is difficult to develop global Fintech by managing it from Poland. You need to build a local business development network in each country, and not everyone has such capabilities. It’s also about knowing the individual markets and the rules that govern them. It is often necessary to open a branch in the country where the business will be conducted.
Beyond banking solutions for SMEs
Currently, the industry is during a widespread transformation. The pandemic has accelerated the digitization and development of beyond banking services. This is because financial institutions around the world are aware that the winners will be those who offer solutions to SME customers that match the new digital reality, including but not limited to intuitive ecosystems of banking and non-banking services and products.
This is very important, as a strong trend towards self-employment is evident, resulting in a significant increase in the number of micro-businesses and freelancers settling their accounts with the tax authorities on their own. In this situation, the possibility of using Fintech services is an ideal solution for small businesses. It is also worth noting that many countries are introducing central invoice registers, inter alia to tighten up tax collection and counteract the underground economy. This can be seen in Poland, Italy and Latin American countries.
Banks better understand that there is a need for a comprehensive offer to serve a particular group of customers, built within an ecosystem of different specialized providers and that Fintechs are not a threat (at least for now!) but a good partner for cooperation. One of the solutions for the banking sector is the technology offered by CashDirector, which automates daily financial administration processes and uses artificial intelligence algorithms to manage cashflow.
CashDirector’s strategy involves strategic partnerships with banks and leveraging the power of their brands. This allows financial institutions to offer their customers automation and digitalization of financial processes, which will lead to a competitive advantage. This is very important in the context of the current situation, where there is a high demand for broadly defined financial services rather than classic bank offers. Today, more and more such services are provided by non-banking companies and banks themselves are the capital provider. CashDirector is a leader in digital business services for SMEs, which is becoming an essential solution for financial institutions. It will allow banks to increase their customer base and offer new innovative services.
Banks increasingly understand that they need a comprehensive offer to serve a given group of customers, built within an ecosystem of different specialized providers, and that Fintechs are not a threat but a good partner for cooperation. The winner will be the one who builds the best ecosystem, not necessarily the bank. However, the most important thing is that the customer wins.