I’m visiting at the FinTech Stage, a new experiment at BAI’s fall conference. This morning’s session includes a great panel on the future of fintech. Moderated by JP Nicols, chair of Next Money in the United States, this is a great line-up. Pascal Bouvier (Santander), Ron Shevlin (Cornerstone Advisors), Rumi Morales (Chicago Merc Exchange), and Mike Sigal (500 Startups). You can catch a similar panel and a discussion of fintech trends at future BAI events.
AI, open banking platforms, machine learning, and digital customer experience are the first topics — within minutes of the start!
Ron Shevlin notes that technology needs to focus on the revenue side of the equation, the underlying business model and new revenue streams. Not just looking at more efficient operating models and cost efficiency. As JP notes (with props to Henry Ford), “it isn’t just about building a faster horse.”
Technology is a threat to the current banking ecosystem, notes Pascal. There are amazing opportunities. But, regulation is ever-present. It won’t be possible to create new models, without the cooperation of the regulators.
The Chicago Merc is very impressive with their next-gen investments. They’ve evolved way past blockchain, now looking at AI, the next wave of technologies. CME has been around over 170 years. Rumi notes the tech is nice, “but you need to be able to act.”
Risks and opportunities: the yin and yang of fintech?
Startups don’t have the same geographical boundaries. Smaller banks are tried to a geographical boundary. If you are physically tied to a location, it limits how much you can grow, notes Shevlin. From a strategic perspective, who do we serve? This is a challenging dynamic for small and medium-sized institutions.
But it isn’t just about the tech. Mike Sigal notes that it is about the rising customer expectations. (This is something that Beyond the Arc has commented on a great deal in the past.) People are looking at Starbucks and Amazon, and expect their bank to be on that level.
There are different approaches to change, notes Nicols. They can be summarized as: fixing pain points, break-throughs with new tech, and then total reframing of the business. What are the opportunities for transformation?
In light of this new technology, we have different consumer expectations, confirms Pascal Bouvier. Experience and expectation are at the center of this transformation and change. “Data is a new asset class.” This is a great thought! I hope that Pascal is able to expand on this on Twitter or in his blog.
In this age of transformation, it may lead to a re-thinking of who your “competitor” is. Rumi notes that this may become a bit antiquated, as new partnerships become the main driver for a re-framing of business models.
Will banking be totally transformed? Ron Shevlin, expert in strategic planning, says the answer is not so simple. Regulation limits the options. And “culture” is seen by some banks as a core asset. They think they can compete based on being nicer than everyone else. Ron also challenges the notion of “asset-lite” companies (like AirBnB or Uber), and whether that is a model banks can follow. Focus on the revenue, counsels Ron. (Hmm, reminds me of “show me the money!)
“Oppression of compliance.” That’s a great phrase. JP notes 3 key challenges for banks: Cost, Culture, and Compliance. He has asked the panel to address compliance in the context of fintech. This should be a panel discussion in and of itself!
Great discussion on fintech, BAI has done a really nice job of sparking the conversation on fintech trends at this session!