Disrupting the Financial Services Industry: Shaping the future
Welcome to the last article of my series of articles around a Fintech retrospective. In the previous articles I described the origins of the Financial Technology revolution in which incumbents were challenged by startups with a new breathe of financial services. Even though these so-called disruptors opened a promising market, they struggled along the way and were forced to join banks into a collaborative model. This is the current status, so let me share my point of view of what I believe the future holds for the Financial Services Industry
It is bold to make an accurate statement of what is going to happen in the future. Early this year, the World Economic Forum took place once again in Davos (2018), and several insights were exposed as key drivers for the Financial Services. Once again, I found those points of view aligned to the reality of the industry
Blockchain gained momentum for its applicability across industries. A famous phrase that went around the conversations was that blockchain passed from beta version fair enough to enlighten the advances of this technology. Although, we all are aware of the challenges that its infrastructure demands, seeing the major players of all industries betting in blockchain, lead us to consider more seriously this technology for core business processes, rather than only for experimental use cases
Concerning Artificial Intelligence, not only that was the main topic around the latest innovations, but also the discussion was centered about the impact of our way of living. We passed from seeing AI as a utopia, into an era in which we need to define how this is going to work giving the fact that smart machines are now part of our daily lives
Another remarkable trend is the commoditization of traditional systems like KYC, AML, credit rate scoring (…among others) into standards de facto solutions: A great example is the Singapore’ MAS (Monetary Authority) which is promoting the delegation of the backend system mentioned above as a contracted public services provided by the government, so banks can have an industry- standard and uniform approach for rating for KYC, AML, etc. This also benefits banks, so they can focus on innovating client services solutions, taking for granted the availability of this commoditizable systems supported and overseen by the government
My Point of View
Even though the fintech world may be seen as saturated, I strongly believe we are at the very beginning of this revolution. Most startups are focusing in the most popular arenas like payments, loans or the any of the once mentioned in the Fintech 1.0 wave. Nevertheless, my recommendation would be to be more open-minded and explore new areas. Insuretechs are raising to solve the inefficiencies found in insurance incumbents, regtechs are focusing in supporting central banks and regulators in the evolution of security and compliance matters… for naming a few. And all of them are figuring out profitable business models! So, expand your perspectives for the future
For the entrepreneurs: When thinking of new challenges, if you are considering the hot topics mentioned before, you must consider that big players are investing tons of money and resources… so you may ask “as a limited-resources startup how would I succeed in this arena?”. My conclusion is that you must come back to the basic questions: what problem I am passionate to solve? What improvements does my customer will experiment? What are my value propositions and differentiators? … Remember that aside from the technological advances, there is customer journey that needs to be re-imagined (and please, not everything is solved by a mobile app!). After obtaining these answers, analyse whether your solution can be implement by using cutting-edge technologies such as blockchain or IA and if so, do it fast! As the common wisdom say, the best way to predict the future is to create it! And remember, as some bankers stated at Sibos last year “data is the new oil”
Finally, as customers we must be prepared to embrace this disruptive revolution. Remember when I began recalling my first bank experience? Now, I picture my kids in the same situation, but not in bank, but rather in facebook or amazon, not in a branch signing papers with an account executive, but rather in a smartphone application with a chabot, and perhaps not saving money in local currencies, but rather in bitcoins or maybe managing their financials a totally unimaginable way nobody can predict now… but that is the most exciting part of the future, isn’t it?
