Welcome back to the Finextra Future Money liveblog where we'll be keeping you abreast of all the news and views as leading figures from the fintech world gather at Level39 in Canary Wharf to explore the new wave of innovation sweeping across the financial services sector.
And that's a wrap. There's plenty more going on at Level39 this afternoon as we hand over to Innotribe but we're winding up the liveblogging from Future Money, which seems to have gone down well:12:09
Mihaescu says that there doesn't have to be a tension between building a great company and working towards an exit. We're in this to make money and the two can go hand-in-hand. We don't focus on the exit but it's what drives the ecosystem, bringing in money that can be pumped back into the next generation.12:05
Audience Q: is there too much of a focus now on exit strategies, do entrepenours just want to make a quick buck.
Khan says half the people running startups shouldn't be. They do it because it's the cool thing and they are looking ahead to exits or 'acquihire'. Some firms already talk to potential investors about exit plans despite not even having a product. Big red flag.12:00
Lumley asks good Q: is the focus on the quick elevator pitches a good way to judge potential? Khan says he doesn't want a massive Powerpoint presentation, you need to be able to get an idea in a sentence, as he did with Spotify.
Mihaescu says that a firm must have a person who is good at explaining it. Not just to attract VCs but also customers, partners etc. You can't say 'if they build it they will come'. Doesn't work like that. He doesn't want a presentation, he wants a conversation.11:54
Onto areas of interest. Rizzo says he look for firms combining three areas, the 'magic triangle': loyalty, analytics and payments. Lots of startups doing 2 of 3, eg Simple, Moven. The other area that's hot is crypto-currency.
Khan uses Western Union as the prime eg of a firm that is ripe for disruption. "It needs to be destroyed". But you don't want to create a new Western Union, you want a new model.11:46:
And we're off. What makes you open up your wallet? Rizzo says the person accounts for 50% of a decision - you have to trust and believe in them and they have to have a concrete vision, not "bullshit".
Khan agrees that the person is one of two important factors. Doesn't want to invest in someone who just wants to escape their crappy job. He says he invested in Spotify's founder, Daniel Ek, rather than the firm. Ek used to stay at Khan's flat at the beginning and was always working through the night. Ek cared about creating a great product, not a big, rich company.
Mihaescu adds that he doesn't invest in an idea - hears a hundred good ideas a day. You have to have a clear path to success and making money.11:17
Time for a quick coffee break so don't worry if the blog goes dark for a while, we've not been bombed
We'll be back soon for the final session, which is called 'Show us the money: What do VCs want from their investments? What do start-ups need to do to attract them?' Shakil Khan, the founder of Coindesk and an early investor, Spotify and BitPay is joined by Matteo Rizzi from SBT Venture Capital and Mircea Mihaescu from Sberbank. Finextra's own Liz Lumley moderates.10:58
Budd says that APIs are not just about opening up to outside developers, banks are doing a lot of stuff internally.
Goyal says that you can't just put an API out there, you need to nurture the developer community and make life as easy as possible for them. Braintree is a good eg of a firm that did this well and that is why it has been a success. 10:48
Ooh, now Goyal says he sees no future for Swift. It will die within three years because the way we move money will change (bitcoin) BUT he thinks Swift has huge potential to own the API economy.
Fidor now uses Ripple to move money between three countries without even touching Swift.10:41
Goyal says that the API world is not some utopian dream - he invested in Simple and Fido Bank and Moven, which are all showing what can be done.
So big banks need to think about this. He disagrees with the earlier assertion that banks have an inherent advantage thanks to their control of pipe. Says look at bitcoin and how it could completely bypass them.10:35
Finally, someone else gets a word in...
Budd says that from a commercial banking perspective, the technology isn't important in itself, what's important is being relevant to customers. So apps on top of APIs less important than the integration for clients that makes their life easier.
Gallego Vázquez says that customers are actually demanding APIs, even if they don't phrase it like that - they are demanding what APIs can give them. The most important thing a bank can do is share its data. BBVA giving developers access to anonymous transaction data has resulted in more than 150 applications covering everything from avoiding queues in restaurants to where is the best place to open a shop. 10:21
And on that discordant note, we move onto the 'welcome to the banking app store' panel. Edward Budd from Deutsche Bank, Udayan Goyal from Anthemis Group, David Pope from Jumio, Simon Redfern from Open Bank and Jose Antonio Gallego Vázquez from BBVA. Consult Hyperion's Dave Birch moderates.
Birch begins by noting that APIs are complicated and not in banks' comfort zones but are strategically important. He then praises PayPal which opened up APIs first. Yet even PayPal had to spend $800m on Braintree. 10:08
Nice provocative Q from Tejani: if banks don't innovate and are eaten by new rivals, who cares?
Whoriskey says industries have tipping points. Who wants to be the next HMV? Says it's inevitable that some banks will fall off the edge but banks will fight furiously to succeed - which is good for customers.
Audience point: retail banking innovation is PR, branding. Pingit is rubbish. Real bank innovation comes in capital markets where the real money is. No incentive in retail.
Awkward...Clarke-Walker worked on Pingit. Not surprisingly, defends it.09:59
Audience Q on the Facebook money license and BBVA buying Simple.
Clarke-Walker notes that Simple is a great eg of the third option beyond collaborate and compete: buy. That's what Google, Facebook etc.Nothing wrong with that. Dare warns through that Facebook etc are good at letting the firms they buy just get on with it. It will be harder for BBVA to leave Simple alone because of culture and because of reg environment.09:46
Tejani gamely tries to get some egs of innovation failures from the panel. Clarke-Walker talks about failure is fine, admits that when he was at Barclays plenty of projects had to be shelved. No egs though...
Soulé says BNP is used to launching just a few things a year so chance of failure is small but when you innovate you put more things out and put them out quickly which means that they might not be perfect, you fix and refine as you go along. But this is alien to banking mindset.
Whoriskey says we undervalue the 'dumb pipes' and the advantage it gives big banks by providing a platform for innovation.
Whoriskey highlights the importance of research when it comes to innovation and the value of having the board's ear - her unit now reports twice a year to RBS board - gets buy-in. Innovation isn't just a load of punts, RBS has a framework in place that helps it decide where to place its bets.
Where is RBS placing bets? Digital, data, cloud, APIs, security.
Clarke-Walker answers audience app Q
He says that banks are the plumbing but they can also collaborate, compete or acquire new players who are involved in their industry (industry in the widest sense). Don't just be the dumb plumbing. Dare agrees about blurring lines between industries - especially between banking and retail.09:25
Right, first Q for the panel: why are we seeing such disruption in fintech? Soulé says that banks are seeing huge disruption from Web firms, particularly noting the rise of Baidu etc in China. Dare makes a more general point - we're in an age of the unknown. Whoriskey thinks that the whole ecosystem is changing because new entrants aren't trying to be banks, instead they are focusing on small slices, which poses a different sort of threat. Clarke-Walker argues that banks need to stop seeing everything as a threat, treat disruption as an opportunity.09:18
We begin with a Q for the audience: do you think large banks are capable of delivering the innovation that the startup community does. Maybe it reflects the makeup of the audience but there's a 50/50 split.
Ooh, we have a special little app built just for this session so that delegates can ask Qs via Twitter and then vote for the best ones.
Innotribe chief Fabian Vandenreydt has given us a brief overview of this afternoon's event, where 15 fintech start-ups will pitch their business ideas to an audience of bankers and VCs at the European semi-final of the startup challenge.
And now we're onto the collaboration or competition panel, which is moderated by Farid Tejani from ignitr. He's joined by Travers Clarke-Walker from Fiserv, Andrew Dare from HP Enterprise Services, Matthieu Soulé from BNP Paribas, and Brigid Whoriskey from RBS. 08:57
It wouldn't be a liveblog without some WiFi fun and games but we're online just in time for kick off. This morning we're talking collaboration and competition, apps and APIs, and attracting VCs before handing over to Swift's Innotribe Emea start-up challenge.You can read the full agenda here (PDF).
and remember to tweet using the hashtag #FutureMoney