5 Common Themes at Sibos and Buttonwood
I was fortunate to attend both SWIFT’s Sibos conference in Singapore and The Economist’s Buttonwood Gathering in New York last month; the former as a speaker and the latter as a grateful guest. Both events were incredibly engaging from an intellectual standpoint and provided opportunities to connect with thought leaders from across the whole spectrum of FinTech, both from the startup world and the incumbent side.
The top 30 global banks are worth $2T, while the entire FinTech universe is only $100B; we’re only in the 2nd inning
I was out in Singapore with Steve Weiner to present our research on Millennials at the Innotribe exhibit and represent Wharton FinTech. At Buttonwood I was a guest of Adam Nash, who spoke on a panel ominously-titled “Rise of the machines.” And although these events took place on entirely different sides of the planet, there were threads (and people) that appeared over and over at both venues. Below are a few of my thoughts, along with a liberal sprinkling of tweets, that summarize those themes.
Consumers
One point that Steve and I brought up in Singapore during our workshop on Millennials was that while technology has always been core to financial services, it is getting ever closer to the end consumer. This raises hurdles around the implementation of technology because consumers are more fickle than employees and need more education. We argued that the startups are built with this mindset from the bottom up, while the banks are only now playing catch-up.
No one understands this better than Adam Nash, who was quick to point out that the trend of technology empowering end users at the expense of financial middlemen is not a new one. His co-panelists appeared to echo this sentiment.
That said, none of this is lost on the bankers. During an Innotribe workshop at Sibos, the attendees were polled to determine what they believed would be the biggest drivers of change in financial services in the coming years. The consumer was the clear winner in that horse race. It seems that the banks are starting to figure out something that the startups have long understood: the companies that will win in every sector are those that focus on users first, rather than the bottom line.
Millennials
If consumers are on the minds of bankers on both continents, then Millennial consumers are the ones keeping them up at night. Everyone wants to know what’s going on in Millennials’ brains and how to earn their trust: a topic I have a few thoughts on.
And I can’t talk about Millennials and FinTech without mentioning Scarlett Sieber. Scarlett was named one of the “top 50 most influential in FinTech” by Onalytica and is now an SVP of Open Innovation at BBVA, and head of BBVA’s Millennial Initiative. Steve and I met Scarlett in Singapore and I ran into her again in NYC where we discussed how Buttonwood felt like Sibos part II. She is a great example of why banks may have a reason to be bullish. If they are going to compete with the FinTech behemoths of the future, they have to figure out how to attract and empower talent like Scarlett.
Blockchain
Of course, one cannot attend a conference even tangentially related to finance without hearing the word blockchain thrown around. Sibos and Buttonwood were no exception. Innotribe’s “New Kids on the Blockchain” panel at Sibos was so well attended that the overflow seating overflowed. I think Steve put it succinctly in his tweet of the ordeal.
Blockchain was also a major topic at Buttonwood. Blythe Masters made an encore appearance to discuss her work with Digital Asset Group and the impact that distributed ledger technology is having on banks today.
I was also very fortunate to join Blythe, Dan O'Prey and Oliver Bussmann for a World Economic Forum workshop at Sibos, during which I learned more about equity settlement and clearing than I ever did during my undergraduate finance major 🎓
Artificial Intelligence
Many people at Sibos and Buttonwood suspected that machine learning and artificial intelligence would make a big impact on their businesses, but no one knew how to quantify the impact. Furthermore, most didn’t really want to admit that their business was at risk of being displaced by superior technology that can provide the same service — or better service— without the overhead costs associated with thousands of employees.
The truth is that machine learning has existed for a long time, especially in finance. As the state of the art transitions from artificial narrow intelligence — or weak AI — towards artificial general intelligence — or strong AI — the percentage of non-routine cognitive jobs at risks will continue to grow. Financial services consist of almost entirely this kind of work, and the industry is exposed to a disproportionate risk of disruption from this technology.
Change
There seems to be a rule that the bigger something gets, the more likely it is to be compared to Uber (if this is not yet a codified rule I would like to submit “McAuley’s Law” as a suitable name 😉.) In this regard, finance is like everything else.
One thing that everyone now agrees on is that FinTech is a real thing. Just like startups aren’t just smaller versions of big companies, FinTech firms are not just smaller banks with better-looking apps.
Disagreement
While people generally agree that FinTech is here to stay, not everyone agrees on the implications for financial services as a whole. Is the FinTech wave good or bad? Is it truly disruptive, or just hype? This poll at Buttonwood yielded a particularly confusing divergence of opinion between the t-shirts and the suits.
There’s also disagreement within the industry around whether everyone needs to play nice. Most people say cooperation is necessary while others — such as Mike Cagney — aren’t so convinced.
I think the one person most qualified to speak to this is Blythe Masters, former Head of Global Commodities at J.P. Morgan. She lived and thrived inside the belly of one of the biggest finance beasts; now she runs her own FinTech startup. She knows how the incumbents think but still believes the future will not be the David and Goliath story of classic disruption that many hope for.
Thoughts
I was excited to see the common themes emerging in Singapore and New York. And even more so to see the differing opinions and perspective that made up the cumulative five days of FinTech conference content.
The banks of the future won’t have customers, they’ll have users
I look forward to being a part of this evolving conversation and helping to shape its outcome. I’m looking forward to going back to both Sibos and Buttonwood in 2016 🚀
