FinTech Connect 2018 conference round-up

The rivalry between established financial institutions and digital startups dominated proceedings at this year’s FinTech Connect conference, with a variety of opinions aired during panels and speeches over the last two days.

Partnerships prevail

Paul Hamilton, partner at technology transformation firm PA Consulting, stated on one panel that the ‘if you can’t beat the, join them’ strategy has become the obvious path as banks struggle to keep up with the digital innovations and mobile-driven strategies of the likes of Starling, Monzo and Revolut.

He said that for incumbent financial institutions “FinTechs have been this annoying mosquito”, explaining that “we can’t move fast enough, the only option [for banks] is to evolve is to partner with FinTechs”.

Harrie Vollaard, head of FinTech ventures at Rabobank, admitted that many established financial institutions find it “difficult to reinvent themselves” against a backdrop of rapid technological change and shifting customer expectations. As a result, these institutions are now choosing not to compete directly with their more agile rivals, but rather to enter into mutually beneficial deals.

Big bank ‘omnishambles’

Another panel session saw Quadient financial services specialist Andrew Stevens argue that big banks lack focus on getting a full and seamless customer experience right, something which has hastened the rise of digital challenger banks.

“The big banks are making an omnishambles out of omnichannel experiences,” he stated. “Customers can see that and are going to the digital-only challengers who only have one single channel that they do so beautifully well it more than makes up for the other channels.”

However, Stevens was still optimistic that the incumbents can ultimately overcome the challengers. “Unless Monzo and Starling begin to open branches, they can’t compete with the big banks,” he opined.

A representative for the big banks - Ruchir Rodrigues, managing director for digital and open banking at Barclays - said the industry has been “digital for decades” and suggested he works for the UK’s “largest FinTech”.

In his keynote speech, Rodrigues explained that digital change had been underway at Barclays for the last six or seven years. “People talk about digital-only and app-only banks, but seven million of our customers interact with us digitally,” he pointed out, adding: “It’s not just about the app, the most important thing is the shift from being product-centric to customer-centric.”

Lipstick on a pig

Neal Cross, chief innovation officer at the Development Bank of Singapore (DBS) used his platform to state that European banks are getting digitisation and Open Banking wrong by failing to address customer pain points.

He said that a shiny new interface - or “digital lipstick” - will not help banks beat mobile-only competitors, and while “most banks are doing an okay job”, “making your bank a bit sexy” is not enough to adequately serve the customer.

He concluded by urging banks to “stop using regulation as an excuse not to innovate, because the best innovation happens when you have constraints”.
Elsewhere, Open Banking was the focus for a panel debating its merits in the context of the second payments services directive (PSD2) and the General Data Protection Regulation (GDPR).

Nationwide’s head of transformation Matt Perks said the term Open Banking has become overused in the industry and customers don’t know or care about it.

He argued that the problem is not about educating people about the changes which force banks to share personal data, “but developing the compelling products and services that convince them of the value of giving over their data”.

No love for insurance

From banking to insurance, and the admission that the latter industry “isn’t loved in anyway shape or form”, according to Matt Poll, chief executive of Neos.

He addressed the fact many customers do not trust insurance providers, thanks to low and negative engagement, dysfunctional pricing and a perceived lack of value.

“There’s a really bad industry relationship with customers currently,” he said. “The UK market is one of the most competitive in the world, so there’s so many different players and the issue’s compounded by commoditisation through price comparison sites.”

Cyber crime warning

Another key theme during the conference was security and cyber crime, with Jo Ann Barefoot, chief executive and founder of Barefoot Innovation, warning that assets under threat total $2.5 trillion, “the equivalent to the GDP of the whole of the UK”.

Speaking about the need for an integrated approach to regulation and technology, she noted the uneven playing field in FinTech. “I have to worry about data privacy... others don't,” Barefoot - who also co-founded Hummingbird RegTech - said.

The panel on regulation and technology integration was in agreement on the need to maintain innovation to remain ahead of the cybercriminals, expressing some relief that regulators are beginning to work more closely with tech companies to develop integrated solutions.

Proportional representation

Awareness was also being raised about the gender imbalance in the industry, with Andrea Dunlop, chief executive of acquiring and card solutions at PaySafe, arguing that girls need to be introduced to the world of FinTech from age 10 onwards.

“There need to be more of us out there inspiring people,” she said. “If we get to women by the time they’re in university, it may already be far too late.”

Dunlop continued: “It’s not that men hold us back. I’m here today because of men, but I stepped forward and I took the risks. Just because we do a good job we should not expect things to be handed to us on a plate. As a woman, you need to have the courage to ask for it.”

The panel session was split over the issue of positive discrimination and “box-ticking” though, with Trillion Fund chief executive Theresa Burton arguing that the industry needed something measurable. “[Women] have to work so much harder because we don’t have 50/50 representation, head hunters are lazy and won’t take the time to find a fair representation otherwise.”

Joanne Dewar, chief executive at Global Processing Services, responded that positive discrimination “can undermine the efforts of women who have got into roles because they’ve been as good as the men they’ve come up against”, adding that women need to challenge the unconscious bias in the selection process, rather than try to skew results.

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