Another week, another FinTech event. It seems our industry has more events than most. Last week was MoneyConf in Belfast, and this post provides my observations from that event as well as some thoughts on what is needed for greater industry progress.
MoneyConf focuses on the future of payments, eCommerce, cryptocurrencies and financial services. The event last week in Belfast was its inaugural one. Historically,
has been known as a major industrial city in Northern Ireland (i.e., where the Titanic was built and departed on its infamous voyage), but, more recently, has diversified its economic and arts sectors (e.g., it is now where “Game of Thrones” is filmed).
My overall MoneyConf observations:
1. MoneyConf was oriented toward FinTech start-ups... and MUCH money continues to flow into this space. Financing to payments start-ups
continues to be on pace for another record year. This level of investment should indicate significant industry innovation is at hand.
2. Almost all FinTech start-ups at MoneyConf seem to cater toward small niches and are related to the potential "unbundling" of traditional bank-based financial services.
Harvard Business Review has written about why start-ups are increasingly successful at unbundling incumbents... and the
FinTech space is certainly no exception!
Often times new FinTech players are less burdened by the demands of regulatory compliance to which established banks are subject. Start-ups are unencumbered by core legacy systems and can focus on creating single-purpose solutions, designed to improve the
experience within a single product or service category. It is not surprising to see a relative degree of success and excitement.
3. That said, collaboration between FinTech start-ups and established banks is critical to achieve faster innovation--at scale. (By the way, this is one reason there are so many FinTech industry events!). One of the key MoneyConf sponsors was Santander
and their InnoVentures business unit, who was promoting their "FinTech 2.0" vision described briefly below:
“Many Fintechs have succeeded but today they are still operating only at the edges of banking. To help engineer more fundamental improvements to the banking industry, they must now be invited inside, to contribute to reinventing our industry’s core
infrastructure and processes. That can succeed only as a collaborative endeavour, with banks and Fintechs working together as partners.”
“Fintech 2.0 will cause a major disruption of the banking market, as digital technology has in other markets, such as travel and entertainment. Pre-digital business models and processes will be rendered obsolete, and billions of dollars of value will
shift to ‘new mode’ suppliers.”
Some popular media outlets have written about the battle between FinTech start-ups and established banks. The Economist recently wrote “Why FinTech
won’t Kill Banks.” The media certainly loves a good fight; however, even though start-up—bank collaboration does not make as many headlines, we think it is the smarter way to go.
In closing, some pundits may believe that FinTech (i.e., 1.0) companies are going to unbundle, disrupt and/or kill banks… or going back to a Belfast metaphor—sink them like the Titanic.
However, like Santander, we believe FinTech 2.0 is about collaboration between start-ups and banks—for mutual benefit, as well as for the benefit of a broad segment of consumers. This is a far superior model. Let us know what you think.