So What is FinTech?

Firstly why am I asking the question? Well, because there is alot of media coverage of the “FinTech” start-up scene and I hear many interpretations of what FinTech is from many different people — entrepreneurs, PR, journalists, investors etc.

Therefore I thought I would share my personal experience and views as to what I believe FinTech is.

A Little Background On Me (sorry!)…

For the past 25 years I have been working both sides of the fence in financial services (investment banking front office and technology) but only recently in what I would call “FinTech” by virtue of being the founder of Currency Cloud, a seed investor in Anthemis, an advisor to BUX and a mentor in residence at the Techstars / Barclays accelerator.

More History — Hunting Dinosaurs

When I worked at Dresdner Kleinwort Investment Bank (DKIB) I was lucky enough to have met Sean Park (founder of Anthemis) who had setup a business unit called Digital Markets within the bank.

The concept behind Digital Markets was that technology is far better at trading smaller value trades in “liquid” markets than expensive dinosaurs (flow traders). Sean had also convinced our visionary CIO, JP Rangaswami (now Chief Scientist at to allow IT to report into the front office (a 1st for a bank!). The short version is that I left the management team of equities and joined Digital Markets.

Within Digital Markets we devloped our thinking on the theme of “what will financial services look like in the next 20 years”. There is a visionary video Sean released called AmazonBay that outlines this thinking.

That thinking is the core philosophy behind my personal interpretation of “FinTech”.

Note: for brevity I will use banking as a proxy for other financial services as I believe the story is fundamentally the same.

Judging Fish at Tree Climbing

The issue banks currently have is that customers have become completely dis-enfranchised through a combination of many things; a lack of understanding of the customer; a betrayal of trust; a customer experience that is completely out of sync with the brand values of a bank; and many more. This is well documented.

We all hear many quotes from senior execs in banks about “re-engaging the customer”, “building a digital experience” and other sound-bites. The harsh truth, unless you are a start-up bank (like my colleagues at Fidor), is that a bank is highly un-likely to execute successfully on any of these sound-bites in a meaningful way.

So the question is for banks, why try to be something you are not? Why judge a fish at tree climbing? they just are plain bad at it! It took billions of years for them just to get out of the soup!

Judging Fish at Being Fish

In Digital Markets we believed in a world where the role of banks evolves into the provision of wholesale core banking services. Banks happen to be very good at this (when not at the Casino); for example, safe custody (holding assets), wholesale money exchange, and credit (lending).

These core services will be re-packaged and distributed via companies who are product, customer and country specialists and who are “tech” from the ground up.

I view these re-packaging/distribution companies as being what we currently call “FinTech”. They do technology, they do customer experience, they handle the money; thy create niche financial products from the wholesale product; and are generally regulated firms themselves.

Whilst this evolution of industry structure will not be an over-night, the signs of change are there (and hats off to the senior execs who made this happen); for example, Barclays with the Techstars Accelerator Programme and other banks where I know high level conversations are already going on.

This is not a world of “distrupting” banking. “FinTech” still need banks to do what they are good at. We evolve banking into a financial system where there is a co-incidence of purpose between banks, distribution, product and customer. A world where we judge a fish on its merits of being a fish.

The FinTech Tribe

So, if we view these new distribution / re-packaging companies as being FinTech, then is it just that? a better way of distribution? no, it is more…

Having been lucky enough to have met many of the “FinTech” firms, my personal observation is that FinTech firms exhibit many common traits that might be considered “tribal traits”.

For example…

Technology led rather than financial product led; a deep understanding of customer; exceptional customer experience; well throught through customer journeys; highly aligned product with customer; lean start-up approach to product development; transparency of pricing; simplicity of pricing; fair and reasonable pricing; clear terms and conditions (no bite you in the butt clauses!); simple buying experience; simple on-boarding, frictionless ideals…

In fact, the above are not just tendencies of FinTech, many new businesses exhibit the same.

This is FinTech

The combination of the “traits” above combined with handling of money, distribution, re-packaging and the regulatory piece is what I personally believe “FinTech” to be; as opposed to a “Financial Technology” firm (a firm that does tech in the financial servcies arena — e.g. SunGuard).

However, this is just my view and I am sure others will ahve their own opinions.

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