The rate of change in the fintech industry continues to increase. We’re seeing how emerging technologies present new opportunities for financial services and products. In order to better understand some of these changes, last week I had the pleasure of attending a fintech event in New York to discuss some of the latest innovations pertaining to startups and thought leaders in the field. The event was organized by SAP Startup Focus coupled with the entrepreneurial organization, Endeavor. I wanted to share here some of the most interesting insights I gathered at the program.
Digital banking operates at a different rate of speed to anything we’ve seen before
Throughout the event, almost every speaker spoke about how the world of banking has and will continue change and evolve. For example, let’s take a look at the speed of banking today and how it has changed from analog to digital: today banks are expected to deliver a 24/7 service wherever the customer is. The service needs to be digital, simple, and accessible. Simplicity is a key point; arguably why PayPal has been so successful over the years just it for simplifying a formerly complex process.
Customer expectations, helped by digital, have changed significantly
Customers today are looking for a different type of service than yesterday; one where the customer experience is paramount. Today, the service relies heavily on user experience serving as a differentiator – one speaker at the event stated that their biggest investment has been redesigning the digital appearance of their product.
In this digital world we live in, Walter Wriston’s famous expression that “information about money has become almost as important as money itself,” has never been more evident. As one presenter pointed out, advances in artificial intelligence now translates to a bank identifying if a customer is truly interested in a mortgage or if they’re simply shopping. This allows the bank to get a better sense and use their resources to decide which audience they should focus on.
A new ecosystem is emerging between fintechs, tech giants, and traditional financial players
While the main focus of the event was surround startups and areas of investment, it also became evident what’s really driving SAP’s financial innovation practice. SAP executives spoke about how collaboration is happening. It see now collaboration is commonplace between tech giants such as SAP and startups, whereas a few years ago this wasn’t the case. This is very much aligned with what Belatrix stated in our recent fintech whitepaper. The whitepaper describes how we’re seeing the emergence of a new ecosystem between fintech and traditional players.
Helping to create this ecosystem, SAP has been focusing on its “digital innovation system”, called Leonardo. Leonardo is designed to be an integrated way to bring together different cutting-edge technologies on the SAP cloud platform (machine learning capabilities, real time analytics, and open APIs). For me personally it’s particularly exciting to see the potential of Leonardo with the internet of things (IOT). For businesses that want to implement IOT into a particular business situation, it seems building a specific platform is extremely important to the success of the implementation. It is predicted we’ll start to see more retail banks using sensors in order to provide better, more customized services to their customers. Enterprises & banks will have a more in depth view into their customer’s assets, helping with various services i.e. paying loans, etc. We can also expect to see blockchain networks underpinning many of these emerging IOT systems.
Regulatory issues holding back entrepreneurs?
One of the common themes during the event was reiterating New York having a regulatory environment which is making it difficult for entrepreneurs to get started within the fintech space. New York and other states have been slow to adopt more of a progressive regulatory environment and there is often a complex mix of Federal and State regulations. To compare, let’s take a look at the UK’s Financial Conduct Authority. The Conduct Authority has a sandbox making it possible for entrepreneurs to start and build new companies with the backing of one central regulatory authority. PotentialIy, in the next program I attend, we’ll be talking more about “RegTech”, which will help create the framework for innovation coupled with the safeguards of compliance and regulation.
Where will we be in 2020?
This was a great program providing insight into the latest developments within fintech industry. I walked away thinking what this all means for the landscape of the financial service industry. What will this event look like in a couple of years when technologies’ such as machine learning and blockchain have reached a greater level of maturity? I’m looking forward to continuing these conversations in the near future.