Most businesses would rather partner with a bank for their payment solutions rather than work with a third-party financial technology partner, according to a recent survey by BNY Mellon and Aite-Novarica Group. The firms polled 790 corporate employees in North America and Europe to study the risk of disintermediation, which is when businesses circumvent their banks by engaging directly with fintech firms.
The survey found that only a third of businesses surveyed believed their financial institutions fully understand their payment solutions, with 62% of respondents saying they are already working with a fintech provider. Still, most respondents said they would rather partner with a bank. There was concern over the stability of fintech firms and what the options and implications would be if a fintech were to shut down abruptly, according to the survey. At the same time, banks were perceived to be more secure than fintech companies, with banks having a proven history of fraud monitoring and fraud prevention tools, as well as minimal client impact due to merger and acquisition activities.
Among respondents who partner with a fintech firm rather than a bank, the most-cited reason for doing so was “more payment options” (47%), followed by “better or automated payment reconciliation” (45%), “easier to submit a payment file” (41%), and “better reporting” and “better integrating with internal systems” (both 37%).