I’m still in shock over the referendum result, but more about that later. According to the technologists we are all going to pay with thumbs, robots will make sure our pensions don’t shrink, realtime payments will be global and and it will be impossible to launder money…
As a fully paid up member of the Gadgets for Addicts society it’s easy to convince me that any new technology is brilliant. But in reality I don’t believe in technology for technology’s sake, and feel their is an element of this in the current range of startups in fintech. Building something to create a market just because you can is extremely difficult and in most cases fails, but building something that the market is crying out for makes good sense. So all the talk about Artificial Intelligence, Crypto-Currencies, Blockchain, Disruption, and so on, is good but does the end user really understand or even care?
Fintech has been around since the 70’s and we sometimes forget that the worlds biggest fintech players are some of the world’s biggest companies – Apple, Microsoft, Oracle, SAP and IBM just to mention a few. These companies along with many others have provided the engines to help clever technologists deliver ATM’s, payment cards, POS and move us closer to a cashless realtime society. In many ways the future has already arrived with biometric payments, realtime bank transfers, marketplace loans, robo advisors, peer to peer insurance and cheaper cross border transfers. But in most cases these are solutions that are still running off existing rails provided by the very institutions we seem to think need disrupting.
The new solutions shaking up the industry are merely an appetiser to the big change that will come if the unseen infrastructures that drive our financial world are replaced for the right reasons. In many cases, this requires large infrastructure changes for incumbents such as the banks and huge investment plays for the new players. The reality is that it will take many years and won’t be a smooth ride, a case of two steps forward and one step back, but I do believe it will happen.
So is blockchain the future? If so, how long will it take to deliver real value, 10 years? Is it fast, is it expensive, is it secure, is it capable of providing deep and detailed solutions, whilst providing a sophisticated audit capability? Will AI transform the client interaction, and will they notice? Will we trust it for advice? Will it become regulated beyond human advice? Will real-time payments become global, and what are the implications? Will the issues around market place loans and securitisation play into the hands of the banks and turn the darlings of fintech into lame ducks? Will global institutions such as SWIFT and VISA/Mastercard be squeezed out of existence over the next 10 years unless they radically change their delivery and charging strategies? Will regulation and compliance issues create a level playing field between banks and new players?
My conclusion as a consumer of these products is that a great deal of them are looking for rapid growth as well as eventually achieving a level of sustainable profit, and this concerns me. As a provider of fintech I would also say that investment patience is running out, and consolidation is taking place as I type, but if fintech can provide a seamless, easy to use and informative range of solutions to its clients, and a low delivery cost, then investment will continue to grow and the future will continue to look bright for fintech.
But what about Brexit the elephant in the room? As somebody who voted to remain I find it hard to be objective about this but here goes. The scare mongers are saying that there will be a sustained exodus out of London and investment will dry up, but I believe the reality is far less dire. London has been the home to world class finance expertise since even before my birth date, not least because it sits in a perfect time zone for the globe to be able to trade with us or use us as global brokers. So once we have seen this through, and the politicians have sorted themselves out, then I believe that common sense will prevail and London will still be a pre-eminent place for finance and fintech.
Anyway, look on the bright side, Article 50 has not yet been invoked, and with a new leader of the Conservative Party coming from the Remain camp we are not there yet.
In the meantime we will continue to innovate. Long live Fintech!
By Mark Bradbury, Founder, Apply Financial