Cognifide recently attended the Wired Money 2015 summit, held at The British Museum, a somewhat appropriate venue showcasing some of the world's most treasured antiquities and artefacts within an ultra-modern architectural setting. The high-quality summit serves to inform the banking and technology industries of trends and issues that may be about to enter the mainstream, and helps us guide our customers through these scenarios as we help them digitally transform themselves.
Summary: In short, there's a real transformation taking place in banking and financial services; mostly centred around the activities and successes of highly-focused and agile banking and financial technology (fintech) start-ups, many of which are democratising access to banking services worldwide. Some of these services and platforms are already transacting in hundreds of millions of dollars a year. It's a very exciting time to be witness to some of the changes happening at the boundary of banking and technology, and is seemingly challenging the broader incumbent banking service providers as they try to remain relevant, especially in areas like retail banking.
While the incumbent banks and intermediaries are beginning to recognise this, they seem to be responding slowly, citing reliance on older more inflexible infrastructures. (Four-months ago Anthony Jenkins, CEO of Barclays, the UK's 3rd biggest bank spoke out about the disruptive force of tech. He was sacked recently (though with a $3 million payout) seemingly by not being able to improve returns and cut costs quickly enough.)
- Financial literacy amongst millennial has never been worse, e.g. understanding of the influence of inflation on interest rates
- It's now possible to go to market (for services delivering seed capital, banking services, payments, debt, venture finance, FX, working and growth capital, and IPO) without involving a big bank (see photo below)
- Financial tech start-ups are demonstrating a real ability to be agile and focus on a core service, vs big finance (and arguably any big company) who struggle to differentiate and be relevant
The relationship of the incumbents with the next-gens
- Only BBVA and Visa presented as incumbents - their slide decks were of generally lower quality than the next-gen companies. BBVA is trying to become a digital company - the CEO's number two is responsible for digital. Visa's message, while encouraging an alliance approach, felt like it was all over the place, switching between being antagonistic or conciliatory toward new fintech companies, but overall came across as somewhat arrogant in my opinion (i.e. fintech needs Visa more than Visa needs fintech)
Quotes and takeaways
- “Consumers prefer convenience over trust.” Raphael Ouzan - BillGuard
- “TL;DR experiences - tap ‘n’ swipe - these are the behaviour changing experiences” - Raphael Ouzan - BillGuard
- "Banks are interacting with digital like your grandmother interacts with the internet.” Valentin Stalf - NUMBER26
- "Most banks will fail in digital. They lack the long term focus, and are too scared of cannibalisation." Francisco Gonzalez, Chairman and CEO of BBVA (second biggest bank in Spain)
- Consumers don’t know or care what FinTech is. Paraphrased from Taavet Hinrikus - TransferWise
- Banks like to present themselves as knowing their customers, by having close relationships with and understanding them face-to-face via branches. But when was the last time you went to your local branch for a chat, when something wasn’t broken? In fact, much more useful data for creating personalised customer experiences comes through online and mobile banking, which facilitate the vast majority of interactions. This is also true of retail and online shopping. Paraphrased from Valentin Stalf - NUMBER26
- 43% of Kenya's GDP is transacted in the form of mobile payments (over feature phones)
- There are over 261 crowd-funding platforms out there - Crowdcube‘s first £1m investor made it on his iPhone 6... at half-past midnight.
- The UK is the first and only market that has specific regulation for crowdfunding.
- In the last 4-years BBVA's mobile active consumers has grown over 13x and continue to grow exponentially (see photo below)
BBVA's growth in digital customers:
Banks are no longer required for a go to market banking services and IPO strategy:
These were our top speakers - (http://www.wired.co.uk/wired-money-2015):
- Valentin Stalf - NUMBER26
- Taavet Hinrikus - TransferWise
- Peter Smith - Blockchain
- Francisco Gonzalez - BBVA
- Shivani Siroya - InVenture
- Julie Hanna - Kiva