FinTech unleashed: How can we build trust in the digital world?
Make no mistake, the FinTech space is booming. But what makes it so important? We invited eight of the world’s biggest FinTech influencers to talk about innovation, a term heavily used to define the FinTech movement and offer a sneak peek into the future of finance.
FinTech is not (only) about the money
Spiros Margaris, one of the FinTech influencers believes that FinTech is “not about money but about trying to make a difference.” Meanwhile, Mike Quindazzi claims that leading financial institutions will embrace “the power of emerging technology, build on the goals of regulation, find the creativity of people and deliver on the value of their brand to build trust in the digital world.”
But how can banks innovate in a world where the FinTech movement knows exactly what customers want and grants all their wishes?
Let’s see what the influencers have to say.
8 answers: What does innovation mean to you?
The FinTech Heroes
Mike Quindazzi: Innovation is about adding things together or taking parts away to create a new offering with a higher value than when you started. It should be a straightforward as “adding” one-click borrowing button with all the automation to gather and process the loan documentation in the background. For innovations to have a chance at life, a company’s innovation strategy needs to support the overall business strategy and objectives. Innovations will succeed past the concept stage if they can be linked to business results, such as acquiring new customers, lowering costs, and growing revenues.
Innovation can be approached in three ways: First, you might be looking for small changes to a process or product that can be characterized as better, faster, cheaper and with a normalized revenue growth. This path clearly has the lowest risk regarding cost outlay and disruption to the business.
Innovation can be approached in three ways.
Second, is when a company is looking for a breakthrough or a significant change to the technologies or business model of a product or service that creates significant new competitive advantages and drives higher revenue growth. This approach has increased risk but given a higher potential return.
The third is more of a radical approach including substantial changes to technology and business model. The goal is to create a new basis of competition in existing markets (such as new technology platform or cost basis) or creates entirely new markets that provide customers with new value. Success comes from finding the mix of innovation types to achieve strategic objectives include the expected ROI from a pool of R&D spending.
Jim Marous: Innovation is the commitment to, and the application of, current and new technology and processes to improve on an existing solution or respond to a current or future need. There is no definitive scaling of how large an innovation needs to be, but there should be a way to measure the impact in monetary terms. An innovation can be as subtle as being able to use a person’s digital address book to populate a P2P transaction or as significant as being able to provide proactive financial and non-financial solutions, using a voice device that will simplify my everyday life. There is no reason my financial services partner couldn’t provide me traditional financial solutions in addition to integrating my personal calendar, travel, entertainment, shopping and social tools.
Spiros Margaris: My definition of innovation is an idea that provides something new or improved but only in combination with the most important element, which is that it must also provide a real added value to the customer.
The future of finance should extend far beyond traditional financial solutions.
Andreas Staub: In one sentence, I like the statement of Clay Shirky: “A revolution doesn’t happen when society adopts new tools, it happens when society adopts new behaviors”.
Chris Gledhill: A genuinely new idea put into practice.
Pascal Bouvier: The application of man-made technology that results in productivity growth, i.e. doing more with less or delivering a certain level of output at a lower cost and with a tier value.
Neira Jones: First of all, innovation never happens in isolation and rarely happens by discarding current technologies and reinventing the wheel. In fact, FinTech firms almost always reuse existing infrastructure & technology and look creatively at what exists today to create breakthrough moments.
Today, we have a wealth of digital potential to create ever more personalised customer experiences and these will place new products and services at the heart of the consumer’s day to day life. So I guess, for me, innovation in this context is thinking outside of the box and using technology and processes to create an even richer customer experience. Look at Amazon: whilst everyone is looking at making the payments experience shorter, slicker, more fun, they simply decided to eliminate that step altogether with Amazon Go…
David G.W. Birch: It means finding a sustainable business model that allows market participants to make money in a new way. Invention isn’t enough!
What does the future of finance look like?
Mike Quindazzi: In 2017, 1.5 million people around the world will be added to our city populations. By 2050, nearly 70 percent of the world’s population will live in urban areas, fueling a rising middle class. To put this in context, this is an increase from only 18 percent in 1950 and 50% in 2014.
By 2020, nearly ½ of the world’s population will be digital natives, many growing up not knowing a world without the internet. Smartphone subscriptions will grow from 2.6 billion at the start of 2016 to nearly 5.8 billion in 2020, reports GSMA. New consumers will have new expectations for digital on-demand financial service; they will look for competitive solutions and broader financial inclusion.
Already, we have mobile money services available in 90 emerging market to over 1.9 billion people globally; this number may double in the next five years. Once connected, financial institutions will have the opportunity to build trust further and offer customers the range of legacy services including banking, lending, insurance, and investments but delivered in new and more seamless ways.
Leading financial institutions will further embrace a digital-customer-regulator-centric world to shape their future and prosper. This focus needs to happen all while the world is redefining the nature of currency, business operating models are transforming, and cyber crime is becoming a major risk category.
Theses leaders will mostly likely tackle these challenges by creating a purpose-driven mission, embracing the power of emerging technology, building on the goals of regulation, finding the creativity of people and delivering on the value of their brand to build trust in the digital world.
Jim Marous: The future of finance should extend far beyond traditional financial solutions. It should be the center of my daily life, connecting all elements of my day in a seamless, digital and proactive manner. Leveraging AI, IoT, AR, machine learning and contextual engagement, my financial solutions partner could be in the background of everything I do. I should no longer care about how I pay, save or transfer money. Instead, these processes will work in the background, using my personal goals and behaviors to make my life easier.
For me, innovation is thinking outside of the box and using technology and processes to create an even richer customer experience.
Spiros Margaris: In my opinion, the future of finance will be like nothing we know now and nothing like we imagine it—even in our wildest dreams.
Isn’t it unbelievably exciting to be a very small part of that unpredictable change that happens in the financial industry and the huge impact it will have on our lives? It is for me and for many people I respect in the FinTech industry.
It is not about money but about trying to make a difference, in our case in the financial industry, with wonderful FinTech ideas, solutions, and people.
Andreas Staub: Personally, I’m fascinated by the idea that we ourselves are the banking interface. And at the end of the day, it’s „human first“ and about social preferences. Like trust, fairness and reciprocity. Always.
Chris Gledhill: The good news is we can look forward to another couple of millennia of financial services. The bad news for banks is that they’re not guaranteed a part in it. I expect the future of finance will feature some big names that one would not immediate associate with banking today such as Starbucks, Facebook, Alibaba, Lego, Uber, Microsoft, Disney etc.
Pascal Bouvier: The future of finance, or at least one of its version, is already here. It is called Ant Financial, Tencent…
Neira Jones: Who knows?… Perhaps Amazon or Alibaba becoming banks… Oh, wait..
David G.W. Birch: Faster, more cost efficient and (most importantly) more transparent. This is why I talk about “the glass bank” so often. Transparency will mean new kinds of markets, markets that are more cost effective to regulate and well as maintain.
Take a look at our FinTech Unleashed interview series:
If you’d like to know more about the latest trends in finance and meet the top movers and shakers in the global financial scene, join us in London between April 3-6, 2017.