The pace-setters for the coming waves of fintech are the millennials. Now entering their 30s, they’ll be the dominant demographic in the workforce in just a few years. To meet their expectations, fintech companies will have to prioritise transparency, digital first, and personalised services, which were the common themes discussed during the fireside chats at WIRED Money 2017. Companies who are transforming the sector, including those who have pitched to the startup stage panel in previous years, sat down with WIRED to discuss the current trends and predictions for disrupting business in the future.
Andrew Lam-Po-Tang, executive director/business transformation at RGA London, said millennials want mobile and digital first, visual services, and branchless banking. “What we’re seeing now is predictive analytics to proactively offer services, rather than waiting for demand to come through.”
Lam-Po-Tang, who has worked with RGA on companies including Nike and Beats, says there are two other big trends coming through that startups are taking advantage of - a “tidal wave of fintech investment”, and an uptake in open banking.
“What we say to incumbent banks is you don’t have time, there is a tidal wave of smart money looking for clever startups to fund,” he says. Lam-Po-Tang said, from a customer’s perspective, open banking is an exciting possibility for banks to break away from heavily siloed, vertical stacks that are built around facilitating financial transactions rather than customer-first services.
Chris Gorst leads the Open Up Challenge at innovation foundation Nesta – a £5 million fund accelerating innovations on the UK’s open banking standards. He said the common theme among the work in open banking is innovation for the public good. “Open banking is about recognising there is demand for that service in the market and making it more widely available.”
He said there are plenty of novel ways the sector is using open banking – one is democratising the credit process. “Credit is processed in a bit of black box, small business will explain their need for credit and then it's unclear what happens from here,” he said. “There are now novel approaches to credit processes in the market, essentially democratising credit process.”
Calogero Scibetta is head of business development at Everledger, which uses blockchain technology to create permanent digital footprints for diamonds and other luxury goods, like fine wine and art. He says blockchain will one day become the “architecture of choice” for fintech startups.
“Blockchain will enable ecosystems to connect but not all ecosystems need to be connected,” he said. “It's a matter of understanding what value you can bring, what makes you different and what services you can provide that will solve a problem.”
So what about the future? Anne Boden, CEO and founder of Starling Bank, a fintech business with a banking licence that is shifting control to customers, said the Revised Payment Services Directive (PSD2) in Europe will change baking forever – if it’s done right. “If it works and it's implemented, it’ll change banking but a huge number of people will find it very difficult and will questions whether it's in their interest.”
Boden says in just 10 years time, existing banks are likely to fall apart. “A lot of the new entrants into the marketplace are raising customer expectations but not all of them are viable from a revenue point of view.” She said the big banks will respond by matching and copying some of those products by the new entrants, but the test will be whether they’ll be able to slim down their cost base fast enough.
Overall, Nick Hungerford, founder and director of online investment management company Nutmeg, said the future of money is predictive, personalised and proactive. Nutmeg is democratising investment, enabling its customers to set up their own portfolio in less than 10 minutes. Its customer base is more than 40,000 and the company has raised £73 million in funding. Hungerford says fintech used to be about building a product, now it's moved onto the data and how that product works best for the customer. “Next it will be about how do you have platforms that make decisions without you even knowing it.”
This article was originally published by WIRED UK
