FinovateFall 2020: a return to the fundamentals
Like most industries, fintech and banking have experienced massive disruptions in the past six months. As we’ve gone through the process of enforced change, the big question facing our industry is essentially the same as the one facing the entire world right now: what is the “new normal” going look like?
There’s no easy answer to that question, and the unsatisfying truth is that we probably won’t discover what normal looks like until we get there. That said, there are guiding principles we can all use to steer fintech towards a new status quo that works for all parties in the financial ecosystem.
The most important of those is returning to the fundamentals, the reasons why so many of us are interested in, and engaged with, fintech in the first place. The time is right for fintech to step up and demonstrate that the technologies and systems which have been created over the past decade are capable of making a real impact on the world beyond our own little bubble, helping individuals, banks, and technology companies alike.
As COVID-19 made its progression around the world, it became clear very quickly which financial institutions had taken steps towards digital adoption and which hadn’t. Despite years of seeing the writing on the wall, many banks hadn’t really started the process of updating old systems, implementing new technological tools, or re-evaluating stale, outdated processes. As someone who has worked in fintech for a long time, I’m sure I’m not alone when I say that this pattern has been maddening to watch.
It’s tempting to look at the banks that have struggled to implement remote banking solutions for their customers, remote working solutions for their employees, or other needed tech solutions and think something akin to, “this is what they deserve – they had their chance to upgrade, and they didn’t take it”. While that can be satisfying from a fintech professional’s perspective, it’s too simplistic.
From the other perspective, fintech has sometimes made itself easy to dismiss by offering up solutions that aren’t grounded in customer or bank needs. For every solution offering real value that banks could safely engage with, there have been countless others out there muddying the water, serving as distractions.
For banks with limited resources, the amount of superfluous solutions and obfuscation has made the process of picking technology partners a daunting one, requiring hours of painstaking research, request for proposal (RFPs), strategic planning sessions, and more. Many banks simply haven’t had enough spare time or money to properly engage with the process.
As we look to define the future of our industry, the path out of the current morass for both fintechs and banks is to return our focus to the basic value propositions that implicitly underpin our industry and bring them to the foreground. It’s more important than ever to make sure that all sides are delivering concrete value, useful products, and real-world solutions that will resonate beyond the confines of an event like Finovate or a publication like Fintech Futures.
When I say it’s time for fintech to return to and focus on the fundamentals, I’m talking about the fundamental value that people get from financial institutions. In a conversation I had with Backbase CEO, Jouk Pleiter, for the Finovate Podcast, he described focusing on improving customers lives as the “North Star,” the guiding principle that drives them forward as a company. “Overall, it’s all about how we help people improve their financial life,” he added. This is a mindset that has allowed Backbase to become hugely successful, and I don’t think anyone could put the focus where it needs to be more succinctly.
It’s easy to lose sight of that kind of big picture idea when you’re in the thick of things, and it’s especially easy when there are large-scale problems like those we’ve seen in the last six months. But if you take a step back from the day-to-day, a simpler picture emerges.
People need a safe, private place to store their money. They need to be able to move money from place to place: completing payments, sending money to family members, and moving it from one account to another. They need to be able to borrow money to deal with big purchases or unexpected setbacks (especially in times like these). And they need to be able to grow their wealth over time to keep up with inflation, save for retirement, and work towards financial stability and security.
From a fintech standpoint, anything that doesn’t directly lead to end-users being able to do something on the list above isn’t a priority right now. We need ID verification and security tools to keep money safe; we need payments and remittance tools so people can move their money where it needs to go; we need easy, customer-friendly borrowing processes and new ways to define creditworthiness so people can borrow money when they need it at a fair price; and we need tools which let people grow and manage their own wealth if they want to, and services that will help people strategise and automate their savings plans if they don’t. And now, of course, we have to be able to do all of that remotely, digitally, outside of a branch environment.
I love the creative side of fintech, and we will, in time, find ourselves in a position where the industry will have more license to explore, push boundaries, and discover new possibilities. But right now, it’s time for fintechs and banks alike to push those kinds of thoughts to the side, and to focus on the challenges of the here and now.
This is a moment that people will remember. Customers will remember how they were treated by their banks, and banks will remember which tech companies helped them take care of their customers (and which didn’t). Stay focused on the big picture and get remembered for the right reasons. We’re playing for keeps now, and anyone who loses sight of the fundamental value they need to be providing will find themselves forgotten, no matter what the “new normal” looks like.
By Greg Palmer,
VP at Finovate,
director of fintech strategy, Informa Connect