Outthinking the future: Trends, challenges and solutions in FinTech
Outthinking the future: Partnerships to boost your business in FinTech
11:FS is a boutique financial services consultancy. We were founded with the belief that if you buy the same old thinking, you will end up with the same old results, so maybe get some fresh thinking and you might get some fresh, innovative results.
My background is, I started out in software at Telco; then found myself in financial services, through a variety of roles, writing software, project management, business analysis; tried to build a couple of companies; and whilst working in financial services, launched one of the first mobile apps into the UK market, as a supplier into one of the UKs largest banks.
After having done that, worked for Barclays for several years, both on their payment projects, helping them set up the Barclays Accelerator Programme which is very well-know, and of course my claim to fame is I became the head of blockchain research and development at Barclays, where Barclay’s became the first bank in the UK to give bank accounts to Bitcoin companies and to do a trade finance transaction for a hundred thousand pounds with real customers on either side.
So now in my role as co-founder of 11:FS, we support financial services clients to become truly digital, and by being truly digital I mean that they are not just putting a mobile app into the market, but all of infrastructure that sits underneath that is truly digital and from this century.
What are the hottest trends in FinTech?
I think we’d seen historically that there were two major trends that did well.
One was, one was in payments, so companies like Square and iZettle, that’s kind of happened, and I think the other thing that’s happened is the Robo Advisory, this is Nutmeg, this is Scalable Capital and, and many others like that.
What we’re seeing now is the small business sector has really started to become hot on FinTech, so if I run a small company, the bank account I get is very much like the bank account I would expect to get if I was a retail customer, it’s no different and its served exactly the same. Same in insurance as well, the small business sector for insurance and InsureTech, as it’s known, is becoming really, really hot.
And I’d say the third trend is regulation technology. How do you deal with the fact that the requirements in regulation are becoming ever-more complex, ever-more difficult and at the same time, your costs are increasing but your customer demand, customer demands are also increasing? How do you get that double-header? In walks technology, in walks innovative small companies with solutions to that. So, I’d say RegTech, small business, and insurance are my three.
What challenges are you seeing in FinTech?
It’s definitely the integration into the world of financial services. Regulation is hard, compliance is hard, and it’s hard for a reason. Looking after people’s money should be hard, you don’t want someone to lose your money, you don’t want your account to get hacked; therefore, there’s always this balance between how easy is it to use versus how secure is it.
And finding that artful balance is, is really, really challenging, especially for small companies, and, and indeed for large companies; but I’d say the biggest thing is actually that FinTechs are building things without product market fit, sometimes. And when they get it right you get a massive success, but I see lots of really small companies that aren’t testing with customers and aren’t listening to their customers because they think is the idea, I’ll put out a card that has five cards on it and suddenly everyone will use it.
Whereas actually, the most important thing we can learn, whether you’re a big or small company, from FinTechs, is the ones that have done well are the ones that are obsessed with their customer.
I often challenge executives in financial services organisations, how many customers have you met this week and how many of your engineers have you met this week? And that is a really interesting question, because sometimes they’ve met a couple of customers this week, especially if they’re corporate customers, maybe not so much of the retail side, but have they met many of their engineers and how many of their engineers have met customers? I think that bringing the customer closer to the bowels of the organisation is really critical.
And that’s what concerns me, is that a lot of people are paying lip service to true customer centricity, is the buzzword, but very few people are getting that right.
What should FinTech organisations look for in a technology partner?
I think what you’ve got there is a lot of complexity in financial services because of GDPR, PSD2, in the US we talk about Dodd-Frank, we talk about MiFID II here in Europe as well, EMEA39, there is just an absolute avalanche of regulation coming at the FinTechs and also large financial services organisations.
But I think the biggest challenge, we’ve been talking for a few years now in FinTech about collaboration. How do FinTechs collaborate with the larger organisations? How can larger incumbents become customers of those FinTechs? It’s actually very hard to, if you’re a small company with five people and two hundred and fifty thousand pounds of funding, how on earth do you last the two years it’s going to take to get through procurement in those large organisations? It helps to partner with somebody large. IBM’s and other large organisation of that type can really help you get inside those organisations and take you under their wing.