There is so much hype in fintech it's hard to separate what's important and what's not. Is InsureTech set to change the face of financial services? Or will it be the blockchain? *yawn* Do the phones in our pockets still have untapped potential?
Yesterday I attended FinTech Connect's Advisory Board meeting. FinTech Connect is one of the leading fintech events globally, attracting the biggest players and most disruptive start-ups.
The Board advises on the major themes in the market that we feel the conference should tackle to ensure value to delegates. I had the privilege of discussing the biggest issues facing the industry with many of the finest minds in the industry. The cast of characters included academics, analysts, investors, government, incumbent banks, challenger banks, fintechs and a PR chap.
It is rare to find yourself surrounded by such a wealth of knowledge and the group's take on the biggest issues facing the industry was enlightening. I wanted to share their insights:
PSD2 - The biggest and most reoccurring issue. From disintermediation to the death of cards to digital transformation the ramifications of the regulation could be huge. The industry has myopically focused on authentication, which could justify a conference by itself, but the consequences are much greater.
Blockchain - A bit like sex at school. Everyone is talking about it but nobody is doing it. No one doubts for a second the transformational nature of the technology, a genuine 'game-changer' if I ever saw one. Unfortunately use-cases are lesser spotted, and for the blockchain to garner support, it needs to be seen in the wild.
GDPR - It effects everyone but arguably none more so than financial institutions. They hold millions of customer records, often with more data than anyone else, have been slow to invest in cyber security, and have a history of reacting slowly to technology crises. A fine of 4% of global revenue could wipe a big bank out. This is that big.
Artificial Intelligence - Mobile as a technology driver has dominated the last 20 years, and there is still plenty to be done. The next tech driver will be AI. From robo advisers in wealth management to Facebook chat bots helping you manage your money, the rise of the machines in fintech is unstoppable.
Consolidation - The fintech market, especially in the UK, has grown incredibly quickly. It has given birth to numerous start-ups especially in the payments and P2P lending space. As investors shift from handing over cash to seeing which horse looks the best bet to pass the winning post we will enter a period of consolidation. There are simply too many similar businesses in the same market. To scale and seriously challenge the incumbents acquisitions are inevitable.
Bank of the Future - In the last few years we've gone from the fintech threat and the unbundling of banks, to collaboration and fintechs as the saviours of banking. Fintechs need banks' scale and banks need fintechs' agility and speed. We're seeing a number of collaborative approaches and models from accelerators to incumbents building challenger banks themselves. How the uneasy alliance between fintechs and incumbents plays out will likely determine the future of banking.
My take on all of this is one of maturity.
A few years ago it was about legitimacy, growth and disruption. Now it's about regulation, evidence and collaboration.
The fintech industry is moving out of adolescence and truly growing up. And with this maturity comes a new set of requirements and responsibilities. It's the industry's biggest test yet.