Platform is the new black - fintech trends for 2019
Few thoughts after Paris Fintech Forum 2019.
Farewell, blockchain hype
Blockchain fever is gone — that is the first thing that comes to mind after Paris Fintech Forum 2019. Last year’s fintech conferences had blockchain all over them and clearly this was the hottest topic. Now however it seems the hype is over. Which I believe is a good thing actually, meaning that blockchain has hit the “trough of disillusionment” on the Gartner’s hype cycle — which is usually followed by the providers coming up with practical, market-ready solutions that we lack so far. By the way, it’s worth checking out the saucy debate between SWIFT and Ripple CEOs.
The next big thing: platforms
So what became the new buzz of fintech world during last PFF? Undoubtedly — banking as a platform and anything as a service. From processes and services (fraud detection, credit scoring, PFM etc.), through whole verticals (eg. lending) up to digital banking and even core banking. All of it connected via omnipresent APIs of course, as every single provider emphasized they have one ready to be utilized. Interconnectivity and PSD2 compliance where among the most visible features.
This has important implications. Since the market seems to have universally agreed that smooth communication between different providers is a must, we will probably observe the specialization and fragmentation of financial services and applications soon — mimicking the way our smartphone ecosystems have evolved.
Banks which up until recently have had everything under its own roof are facing a new operating model from market challengers: instead of building everything inhouse, they can be a platform that integrates various specialized services (lending, accounts, payments, but also processes invisible for customer like AML) provided by fintechs. So take eg. Mambu for your core system, EFI4 for digital banking, W.UP for customer insights, and so on, and essentially create a lego-bricks bank. Players like that are already on the market, eg. Banco BNI Europa built on 18 partnerships with various fintechs.
AI-based finance is here
Another hot topic was the usage of AI. Many providers presented how they utilize machine learning engines for various tasks, one of the most spectacular being Oak North — the UK based SME-focused lender, who does fully automated scoring of its prospects. During one of the discussions they wowed the audience claiming their engine is so good, they didn’t have a single default payment yet (!) with ca. 3 billion GBP lent so far.
Regulation still an issue
Digital identity management and bioverification are also on the rise, not only in number of providers, but also in its significance for the market. For many businesses it’s understandably a crucial issue tightly connected to regulatory matters. Speaking of which, the Regtech area is considerably expanding, too. It was a topic of many discussions and had its own stream at the PFF. Regulation keeps to be one of the main challenges for finance market players, especially the new, digitally native ones. For obvious reasons regulatory offices are not as agile and fast acting as the businesses and during many discussions this was pointed as the main obstacle, with Bunq’s Ali Niknam pointing:
Regulators are pushing all the banks into the same direction. (…) Henry Ford said: “If I was listening to people I would start selling faster and cheaper horses”. With current level of regulation, we will not go to “car phase” anytime soon. We will just have faster, cheaper banks.
He actually came with an interesting proposal that it might be beneficial for the market if regulators got divided into small specialized bodies, each responsible for its narrow area of financial market and operating much faster that one large office.
Cooperation model between startups and banks was discussed quite widely, with general consensus that culture difference between two parties is always the biggest issue and the best working setups are the ones where startup has wide autonomy (bank staying as the minor shareholder providing some resources, but not taking control) or is fully incorporated.
You don’t want to be bothered by banking
In general, PFF 2019 seemed to be about getting back to the roots and staying reasonable, which is actually refreshing in this usually overhyped environment. Many panelists emphasized obvious, but often forgotten, truth that technology is just an enabler and at the end of day it should only serve to provide the best experience for the customer. As Atom Bank’s Mark Mullen summarized it:
Let’s be honest: for people outside this room banking is extremely boring. Make it fast, make it simple, make it relevant, make it secure..
It’s hard not to agree, after all you don’t want to be bothered by banking and just get on with it as fast and easy as you can.
Want to get the best experience for your bank’s customers and employees? Check out our EFI4 Digital Banking Platform and drop me a line to book a demo.
