Sneak peek into the future of banking: Interpreting the blurry line between finance and technology

We continue our talk to Eric Horesnyi, a founding team member at Internet Way (French B2B ISP, sold to UUnet) then Radianz (Global Finance Cloud, sold to BT) and a JAX Finance speaker, about the future of banking and how people directly affected by the FinTech movement cope with the marriage of two giants: technology and finance.

JAXenter: Blockchain, the underlying technology of alternative currencies such as Bitcoin does not represent a protocol or a network for exchanging values -it is a value creation system itself. Would you say it makes sense to state that the initial web was about exchanging documents between humans, then came the Internet of Things (IoT), and finally we arrive at the Internet of Values?

Yes. Blockchain gets us to the full transparency, trackability and distributed scalability and resiliency we could not even conceive when HTTP was created. By just agreeing on a hashing code and protocol, and applying it to transactions, we have in front of us a revolution in the way we have shared trust responsibilities in our society, with a huge impact in clearing, custody & settlement for the securities and payment industry, and ability for any community to create its own money (not having to rely on governmental budget policies).

JAXenter: So what is Blockchain then – is it disruptive or innovative, criminal, brilliant or just the future of financial technology?

Brilliant and the future of financial transactional technology. Criminal -definitely not per se. But just like any technology since fire was invented, it can be misused.

Technology per se is rarely good or bad.

JAXenter: Let’s narrow this down a bit. Will the natural course of cryptocurrencies be affected if the European Commission tightens reporting standards for digital currency exchanges?

What the European Commission requires is more transparency. Cryptocurrency operators should not have any difficulty in being transparent on whatever is requested in the interest of citizens. In general, Regulators mandate and Web-native ventures are well aligned. We already talked about the impact of SEPA on payment FinTechs: removing borders is in the interest of FinTech, and FinTech creates value to citizens out of open markets. Regulators represent citizens, and FinTech being purposeful entrepreneurs also work towards bringing value to users/citizens. Interests are aligned, and it plays well right now.

What’s coming in Regulation will open opportunities to even more growth in FinTech: PSD2 requires banking APIs by 2017, and MIFID2 goes even deeper in KYC, transparency and end of exploitation of information  asymmetry. FinTechs are already launched and growing to exploit these opportunities across Europe, e.g. Yodlee to aggregate and leverage banking APIs (or Linxo in France), and all the Robo Advisors and PFM to leverage data available thanks to PSD2 and investment strategies transparent natively aligned with MIFID2. The next two years are going to be amazing in FinTech APIs across Europe.

JAXenter: To sum it up – could one say that the FinTech revolution affects all parts of the finance industry – retail banking, investment, funding, insurance, …?

Yes. And that is good for all citizens (cheaper and better targeted offers from the financial industry), fun for technologists, and healthy for incumbent players who need to re-invent themselves, a great corporate project to unite teams.

JAXenter: The FinTech revolution has implications at various levels, one of which is led by developers working somewhere in finance. How should they prepare for the FinTech-driven changes?

He already is, unless he/she went for a three-year-long global surfing trip and missed the latest best practices. And even so, I am sure he/she would soon catch up with the changes. It is a can-do pragmatic attitude already prevalent in the dev culture. Just take this approach and apply it to a sector that seems obscure -hence need to bring simplicity and transparency- though very close to each of us, and -I believe- useful.

JAXenter: Thank you very much, Eric, for your great advice. And looking forward to meeting you at our upcoming FinTech Day at JAX Finance in April.

Looking forward to it. Should be fun.