Big banks must join forces with fintechs

May 5, 2021 - 6 min read

By Lan-Ling Wolff Fredell

Big banks must join forces with fintechs

Loyalty is no longer key when choosing a bank! 

The Big Four (Nordea, Swedbank, SEB and Handelsbanken) currently hold a total market share of approximately 70 per cent, a figure which has remained essentially unchanged for the past five years. The predominant position is sustained by maintaining a firm grip on the core banking services linked to savings accounts and housing loans. 

The 2020 Swedish Quality Index customer survey for the banking sector showed that 75 per cent of Swedes use services from more than one bank. Moreover, 25 per cent of this group use more than three financial service providers. These figures strongly indicate the trend of unbundling financial services and a shift away from using one bank for all your banking needs. Reduced customer loyalty and an increased focus on digital services demonstrate the increasing probability that fintech companies will gain a stronger foothold in the private customer market. 

Historically, Swedish fintech companies have niched themselves in profitable areas such as payment solutions, consumer lending and stock trading. But the market is transforming as global competition in fintech intensifies. The Swedish market has attracted several of the new challenger giants: Revolut, LunarWay and PFC (formerly Betalo). So far, these challengers banks have not sought to replace the traditional banks. Instead, they have opted to combine low fees for foreign exchange transactions with more personal management of capital in packaging that appeals to a younger and more digital-savvy market.

How can banks ward off fintech competition and protect their profitability in the long term? Well, to find out, PA Consulting conducted three studies – two qualitative and one quantitative. The results highlight three priority areas for banks:

Concentrate on interest rates and pricing

Digital services are transforming customer expectations and behaviour. Yet, it is dangerous to conclude that digitisation in itself alone is enough to meet customer expectations. Digital services are not unique selling points anymore, but rather a hygiene factor that 80 per cent of today’s customers expect.

When choosing a bank or financial service provider, the number one priority for consumers is interest rates on loans (72 per cent) and prices for services (59 per cent). Unsurprisingly, price is still one of the most crucial factors.

Trust and excellent service are essential

Consumers want traditional banking services to be user friendly and payments to be fast. They want low-interest rate loans and savings products that generate high returns. They value rewards in the form of low costs currency transactions, bonus points for airlines, and even cashback schemes.

The study also showed that consumers value good personal advice and want their bank to make them feel appreciated and visible. Loyalty was very high for those lucky enough to develop a long-term relationship with a reliable adviser in their bank. Neither branding nor pricing can compete with trust and high levels of service.

Big banks must join forces with fintechs

Open up services to include fintech products

Increasing numbers are using multiple banks to meet their banking needs. Rather than fighting against the trend, an alternative could be to offer a unified platform where customers can select products and services from different providers. This approach could be successful for incumbent banks for two significant reasons. Firstly, according to the study, Swedish consumers trust traditional banks more than new players. Secondly, they are more likely to buy services from fintech companies if they are affiliated with a bank they already know.

As such, incumbent banks should open up their products and begin to offer fintech services in their banking apps. This allows banks to provide greater value to customers by providing more services without investing in developing them on their own. The more services the bank integrates into an app, the more time consumers will spend on it.


The banking system is increasingly fragmented, and often, consumers have more than one supplier. In every challenge lies an opportunity. Instead of focusing on the past and what has been lost, move forward. Embrace fintech and digitisation to turn the situation into a competitive advantage. The bank offering all financial services inside the bank’s ecosystem is likely to enjoy greater loyalty through the added value of convenience.

Rather than focusing solely on digital bells and whistles, banks should seek to establish mutually beneficial partnerships with fintech companies that appeal to customers. Delivering a platform that offers a combination of its own and others’ products and services will retain and attract new customers. In this model, everyone is a winner.


As the banking landscape becomes increasingly fragmented the question is how can banks protect their long-term profitability? Lan-Ling suggests there are three priority areas to prevent losing market share. 
  1. interest rates and pricing are still fundamental.
  2. customer service becomes a key differentiator.
  3. don’t try to fight against the impact of fintechs, embrace it and instead try to build something that can offer customers access to fintech service as well. 


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This article is an adaptation of an article featured in Realtid. The original is available here. The original article in English is available here.

About Lan-Ling Wolff Fredell

PA is an innovation and transformation consultancy. We believe in the power of ingenuity to build a positive human future in a technology-driven world. At PA, Lan-Ling helps financial institutions tackle the big questions around strategy, innovation, and transformation. She provide leadership to cross-functional, high performing teams to solve the big, hard problems using innovative thinking and breakthrough technologies. Her clients include financial regulators, financial infrastructure providers, European banks, payment institutions, and fintechs. Lan-Ling’s banking expertise and her hands-on experience as an entrepreneur allows her to understand the practical issues that companies face while simultaneously having insight into the broad trends facing the financial industry. Lan-Ling works more broadly with strategy and transformation in the financial industry as well as other industries such as energy and real estate. She has worked in the United States, United Kingdom, Belgium, Denmark, the Netherlands, Switzerland, and Sweden.

Lan-Ling Big banks must join forces with fintechs