8 Takeaways from FinTech Week London
Eliga Services attended FinTech Week London, which took place from the 12th-16th of July. Chairperson, Chris Skinner's speech highlighted the new FinTech landscape.
Digital transformation has become the ‘critical factor’ for businesses around the world, allowing people to work from home and, crucially, customers to be served at home. Here are 8 takeaways every business leader needs to consider:
1. ‘K-shaped recovery’
There’s an upside and downside of a K-shaped recovery, which side is your business on? Business models reliant on physical engagement (hospitality, airlines and events) were on the downside in 2020. Organisations in digital engagement were firmly planted on the upside. This doesn’t mean the end of physical engagement, but it does highlight the importance of digital, which has rocketed in the last year. Some companies transitioned seamlessly, painlessly aligning with the new landscape. Others struggled to catch up.
2. Digital natives vs. digital immigrants
While the digital immigrants have rushed to sign cloud computing contracts in the last year, these organisations are cloud-based, not cloud native. Very little has changed in their business model. They’ve just signed a contract to use the cloud with a cloud provider. For Skinner, this is the ‘fundamental difference’ between digital businesses on the upside versus physical organisations on the downside that ‘still rely on an old broken business model of banking that believes you distribute everything through branches with humans and now they’ve automated it using cloud and digital technology services.’ While it's possible for digital immigrants to transition to digital native ways of working, it represents a steep learning curve.
3. Be smart with data
In his opening speech, Skinner urged banks and providers to be intelligent with data. He advised, 'To be smart with data you have to have rationalised, consolidated and organised your data to leverage it through artificial intelligence.' Organisations cannot be artificially intelligent, if they are not wise with data. He concludes many banks stuggle, because their data is 'fragmented, silo-based, product-focussed and not customer organised.’
4. Code is art
According to Skinner, this is what a lot of banks don’t get. Banks think of their developers, designers and programmers as ‘cogs in the machine, not artists.’ When we look at open banking, we should appreciate the power of code to inspire. He gave Stripe as an example, not because they are the biggest, but because they launched with seven lines of code.
Digital native organisations understand the ‘code is art’ network. However, it’s often challenging for digital immigrants, who are new to the network. Skinner stated, ‘If you design brilliant code as an API or an app or through analytics, then other engineers, other developers, other organisations look at that' and they will say, 'That is just amazing, that is beautiful. I’ll take that!'
5. Open commerce
While business leaders are slowly acknowledging the importance of open banking, the Fintech Week speaker urged attendants to talk less about open banking. ‘We should be talking about open commerce, open worlds, open networks, open systems, open everything.’ Focusing on open banking limits our thinking. We need to consider the whole value chain and the supply chain. We should discuss the whole ecosystem, not just one aspect.
Transparency will be more important than ever. Businesses that ‘try to do bad stuff’ will get caught. While bad network coverage doesn’t mean that people will leave the company, close their accounts or shut down an app, it does leave a ‘smudge or a black mark’ on an organisation. In the decade to come, transparency will be the big theme. Skinner predicted that in the new FinTech landscape, a transparent network will reveal everything about those who are good and bad players. This network will be democratised, distributed and decentralised. Transparency will be the single biggest influence on how businesses and people behave in the new open commerce world.
7. Use digital for good
How can we use digital for good for society and good for the planet? This is something every business leader should be asking. Financial inclusion is one answer. We can now include everyone in the network. This extends to the 2 billion people who were not served by the financial system previously. Skinner acknowledged that the climate is one of the most important aspects of using digital for good, as it will impact our kids' and grandchildren's future. Many providers have a climate index. For instance, Alipay works out how green your life is.
8. Know your purpose
Companies need to have a purpose. ‘If you don’t stand for something, you fall down.’ Skinner continued, ‘What is the purpose of your company? What is the purpose of your life?’ Reflecting on these questions is important, because it will dictate how we behave over the next century. It’s not just about having culture, values or marketing. ‘It’s actually internalising it to every member of the organisation to understand the impact... and how it relates to the purpose of your organisation, which is doing good for society and good for the planet.'
To sum it all up, purpose-driven banking, purpose-driven structures are important themes, along with open banking, open commerce, digital transformations and digital transparency for leaders and teams.
The change we will see in the years to come won’t be disruption, destruction or disintermediation. The industry will see banks being bought by the organisations that are not ‘broken'; Skinner argued that Milton Freeman’s economic model is now dead.
This century is all about stakeholder capitalism: doing whatever you need to do to make a profit whilst doing good for society and good for the planet.