2015 was no doubt the year Fintech captured the imagination. The flurry of activity in the last quarter alone was frenetic to say the least.
But it seemed to converge into a noisy centre, one based often on a lot of talk, promotion, acceleration and, following it, some investment (both from the corporate and investment sides).
The temptation for banks in this environment is to follow the crowd, and start any number of ‘me too’ ideas and concepts, purely because it looks good to do so…
This is where the danger of FinTech lies. The conundrum is, that whilst FinTech should be, and will be deeply transformative, banks are still not giving it the respect or analysis it deserves. . Often that’s because it’s hard to do – particularly in a large traditional financial organisation.
But paying lip service while overlooking the real impact – and speed – of FinTech merely creates a widening chasm between the current, and the fast moving train that is taking the industry forward. This FinTech Gap as I call it, cannot be crossed after a certain point.
Who will avoid the FinTech Gap?
A bank with a clear view on its future now realises that it is quickly becoming a technology company with a banking licence. Those organisations who strongly and deeply embrace FinTech will likely succeed, not because FinTech is ‘hot right now’, but because they are thinking like a true technology company.
Who will fall into the Fintech Gap?
There are banks, large and small, who are struggling to really embrace this opportunity. Part of it purely based on management mindsets, which is sad to see. No one wants any organisation erode the tradition and values on which it built customer trust, but no one wants that tradition to cloud future strategy in the midst of our industry’s version of the Industrial Revolution.
The 10 Root Causes of the FinTech Gap
The causes of this delay as numerous as you think. But they are all powerful, and must be addressed.
“All I care about is this quarter, this year” Shareholders may be ruthless on your results, but building a business that can last the distance means both short term and long term thinking – and action. Creating a culture built around a vision will create strong short and long-term results.
“I can think of a scenario where that won’t work” Making a call on a concept always takes a leap of faith. Creating ever perfect spreadsheets to try and predict the future is a relatively futile task, and something we never go back to reconcile anyway. Picking holes in ideas because small holes exist is prudent – to a point.
“We had our best year last year, so why change anything” Business performance can mask or expose a business model’s moment in time. Thinking a run rate will go on forever is like having your head in the sand. When you’re ahead of the game is precisely when you should apply the resources and leeway to make some experiments happen.
“We’ve got a banking licence, that’s not going anywhere” There are too many industries now for us to refer to where this simply is not a factor. Sure, managing money and capital is important, but how it’s exchanged and where it comes from will take on new meanings. No disruptor will be asking your permission to take your market share just because you have a banking licence!
“Banking is based on good old fashioned service, margins and centralisation” Not only those elements and not for much longer. It will be based on personalisation, technology, distributed wealth and ridiculous levels of data.
“It’s not my job” Understanding and applying FinTech is EVERYONE’S job. Every role will and should be affected by FinTech – it’s making the way we create, manage and move money easier and better for everyone. Why wouldn’t we want that?
“We’re not like Apple” Blaming the level of legacy tech or talent in a business is something that needs addressing. Harnessing new technologies now available means this cost is getting lower to make these changes. Apple is also famous for design – something humans have been doing for centuries. Find a designer, start somewhere.
“We can be like Apple” No you can’t. Apple is a company that for 30 years or more has fought far and against it’s own incredibly unique DNA that was ahead of its time. Design, customer centricity, engineering ripple through every employee, every building and every product, because the only way they’ve ever done it.
“Clients don’t really want all that new technology” They may say that. But in the palm of their hand is a device that they will forever reference against you for ease of use, performance, navigation of complex content and connectivity to others. When this device and those that build for it leapfrog your offering, the customer will simply follow.
“But we launched a PR campaign, we’re doing FinTech” This is merely lip service, and to be honest the best way to start is to start quietly! Make a ground up impact through deep culture change, multiple experimentation and open collaboration first, then shout about it second.
As you can see, all the causes of the FinTech Gap are cultural. If they were merely technical, we would have overcome them years ago, and simply kept abreast of the changes around us. But of all the mechanical components in a bank that needs a service first, it’s not the machines, it’s us.