Fintech – What are the digital hotspots in the world of financial services?
Over the past 3 years, we’ve been heavily involved in some very meaty FinTech projects. We’ve worked with probably the biggest financial institutions in the world. It’s been fascinating. Over that time – Apps were the way forward. Management Apps, Dashboards, infrastructure apps, communications apps, client apps the list goes on. Given that, Apps are still popular but not at the same hysterical level they were 3 years ago. So what are the key things that are happening in the world of Fin Tech. (I promise I won’t mention Big Data.)
We’ve got to start with Blockchain. We hear about Blockchain in the context of Bitcoin but like all good underground ideas they eventually resurface in the enterprise. Data integrity and security will be a forever issue for large institutions. So any inventive ways of taking a leap will be encouraged and Blockchain is just that. Blockchain allows enterprises to make and verify transactions on their network instantaneously without a central authority. Distributed ledger technology tracks the ownership of assets which speeds up transactions and cuts costs while most importantly lowering the risk of fraud. Not sexy – but very useful.
Open Financial Platforms
Dare I say “the EU’s” new Payment Services Directive will force banks to open elements of their financial platforms to 3rd parties. How that happens to ensure security is protected – I’m not sure. But in terms of consumer banking there has been practically no innovation over the past 10 years. I don’t consider “having an app” to be innovative. Equally I do not consider a system that tells me what I am spending my money on to be innovative. Hopefully we will see genuine ground breaking ideas that are respectful of the unique challenges financial enterprises have to consider. New applications like Simple (recently acquired by BBVA, the Spanish Banking Group) are only the tip of the iceberg.
I purchased £100 of Bitcoin in 2010 as an experiment. Unfortunately for me I purchased them through a brokerage called MTGOX. Unfortunate because MTGOX went bust and I lost my £100. Not only that, my £100 would have been worth £4,000 by now. Virtual currencies are immensely interesting. Now we have Litecoin, Dogecoin, Peercoin and Primecoin to name but a few. We can't be entirely sure how that will pan out, but there is a long way to go. Watch this space closely.
Infrastructure Drives Behaviour
In China texting money to people is common. In the UK, we don’t do that. Mobile phones are the way to transact in Africa due to the infrastructure in place. So whatever we see in Fintech this year will be driven a lot by the tech and infrastructure. I cannot wait for Biometric login with my Iris – as I cannot remember all my passwords! Keep a close eye on major infrastructure and tech developments and see how they filter through to enterprise or user applications.
What’s Not Going to Work?
I recently read a “here’s what’s new in Fintech” report and was greatly disturbed to read things like “make it fast and easy to do banking”, “provide recommendations on how to save money”, “alert customers when they overspend” and “build a community of loyal fans”. All mumbo jumbo. That’s thinking from 10 years ago in every other industry. I saw on the news a shock bracelet that gives you an electric shock when you go overdrawn. I really think the FinTech guys needs to go back to the whiteboard!