Financial Technology Working with Incumbents

financial technology represented by world map, figures and graphsAccording to a report carried out by the World Economic Forum (WEF), fintech innovations don’t usually challenge incumbent market infrastructure, as some speculators have suggested in the past.

The report revealed that the key to growth and success are partnerships between fintechs and existing financial institutions. With this teamwork, the fintechs and the banks both profit. Fintech start-up companies can grow and expand their operations and financial institutions can profit with innovative systems that may put them ahead in the competitive world of finance.

Fintech’s innovation is changing the world of finance

When fintech companies began to change things for consumers with companies like PayPal and Thomson Reuters, well established financial institutions were reluctant to embrace the new technology they provided, fearing the impact that it could have on their monopoly of the financial world.

Little did the banks know, in the early days, that financial technology has an amazing ability to rapidly innovate. The co-author of the WEF report, Rob Galaski said in a statement: “Fintechs have changed the basis of competition in financial services, but not the competitive landscape. Fintechs now define the tempo and direction of innovation in financial services, but high customer switching costs and the rapid response of incumbents has challenged their ability to scale”.

A great example of a successful partnership has been Algomi. News is that Euronext, the pan-Euro exchange has teamed up with fintech start-up Algomi to develop software that could change their company for the better.

Algomi news: their software for Euronext benefits both parties

Euronext’s plan with Algomi is to develop an automated trading platform for use in North America. This will be Euronext’s first foray outside of the European market. It’s an exciting development for Euronext and Algomi bagged a $10 million cash boost.

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This deal gave Euronext a minority stake in Algomi and a seat on the board of directors. It’s not the only partnership Algomi has entered into. Back in May, well-established fund manager AllianceBernstien invested to create software that shows an overall picture of bond market liquidity.  As Algomi continues to provide innovative and exciting solutions for large financial institutions, check back for more Algomi news.