Reported by Kate Goldfinch (Associate Editor)
The Paris Fintech Forum returned between January 29th and 30th. Day one opened with Ann Cairns, Vice Chairman at Mastercard, discussing innovation and the benefits it brings. This was followed by a panel on retail banking led by global neo-banks N26, Nubank and Tinkoff. The banks’ founders and CEOs discussed the opportunities and difficulties of business development among other key themes.
Next up was the IMF’s Christine Lagarde and pals…
The Future of Finance at Fintech Time
The Future of Finance at Fintech Time: New Opportunities, New Risks, New Challenges saw Christine Lagarde (Managing Director, International Monetary Fund), Stefan Ingves (Governor, Sveriges Riksbank), Carlos Torres Vila (Group Executive Chairman, BBVA) and Kathryn Petralia (President, Kabbage) discussing key industry challenges.
Lagarde, spoke of supporting diversity in fintech, the kind of diversity sadly lacking in the room on the day (Paris Fintech Forum revealed that only 25% of the speakers at “CEO only stage” were women).
Lagarde also hinted at fintech’s place within the wider financial landscape:
“We are extremely interested in financial stability globally and see the very important role of financial innovations in that.”
Panellists agreed that data control and ownership in the modern world is becoming a hot-button issue. Lagarde noted that;
“Data is the king and we have to make more sense from data”
Torres Vila added;
“The data speaks for itself … it can say that this customer owns a small business and may need funding, so we could provide such a customer with the relevant offerings from the open market.”
The related question of trust was the final topic discussed by the panel. Lagarde concluded that;
“Trust is the life blood of the financial system. Fintech can do unbelievable good things … 2 billion people have access to different platforms globally thanks to fintech. So fintech can do a lot of good concerning the need of financial institutions and people.” Torres Vila added that collaboration and standardised regulation would be the drivers for success in banking.
Sessions on banking needs, regulation and financial inclusion were led by Oliver Guersent, MD FS & Capital European Commission (Be), Francois Villeroy de Galhau, Governor of Banque de France (FR) and Kosta Peric, Deputy Director at Bill & Melinda Gates Foundation (USA).
Regulator Francois Villeroy de Galhau summarised his priorities as follows;
“This year we will be concentrating on three key directions: data protection; cyber security and competition.”
He also highlighted that regulators need to develop international cooperation in financial supervision and expressed his gratitude to the European Commission for their support.
Oliver Guersent agreed with de Galhau’s position and confirmed that data, cyber security and competition are the biggest issues for all financial authorities.
Kosta Peric of the Bill & Melinda Gates Foundation was the first to assert that financial inclusion should be at the top of the agenda for 2019. He argued that governments and central banks must push financial inclusion initiatives on a global level.
“We believe financial inclusion is a huge global economic enabler and it’s not about charity, it’s about enabling service providers to include the unbanked population into the financial system.”
Whilst Peric acknowledged that it’s not easy for big dogs to shift to different business models and sandboxes are needed for banks to try new approaches, Ben Milne (CEO of Dwolla) insisted that inclusion is a must;
“Banking definitely should be a utility and to easier an access to whole range of financial services”
Cross-border competition Ripple goes toe-to-toe with SWIFT
Day two’s main stage provided a brilliantly provocative discussion between Gottfried Leibbrandt (CEO of SWIFT) and Brad Garlinghouse (CEO of Ripple) which tackled the cross-border payments market. Think “David and Goliath” had David been hitting the gym and quaffing protein shakes.
Ripple offers fast and cheap cross-border payment processing, placing it in direct competition with SWIFT for market share. Rumours of a potential partnership have been flatly denied by Garlinghouse who told Bloomberg that;
“What we’re doing and executing on a day-by-day basis is, in fact, taking over SWIFT.”
Despite these fighting words, the exchange between the two was sparky without ever becoming heated and proved a fitting swansong to an event where the clash between old and new approaches had featured so heavily.
“There are two ways of competition – between banks themselves and between traditional players and alternative. I do not see banks going away [but] if banks innovate too slowly, they may lose the market,” Leibbranndt said.
Garlinghouse concurred, arguing that unprecedented choice and competition will drive the market from now on.
“We think about the value. It’s a different view on how the world can work. SWIFT today is just one of the messaging frameworks.”
The CEO of SWIFT feels his company is up to the challenge, especially armed with its shiny new toy, the SWIFT gpi;
“Transparency puts more pressure on banks. SWIFT has never been in a bottleneck and I am extremely inspired now by SWIFT gpi as an instant cross border solution.”
“APIs offer faster and more flexible ways to integrate tracking views and details in bank back-office systems, customer channels and solutions for direct integration in end-customer systems,” Leibbranndt continued before adding;
“Most assets you hold today are digital. We allow banks to move various assets. You can use SWIFT systems whether your account is nominated in dollars, euros or Bitcoin.”
Bragging that XRP consistently handles 1,500 transactions per second and can scale to handle the same throughput as Visa, Garlinghouse managed seized the final word and was met with cheers and applause from the audience. As we enter uncertain times, the crowd, at least, appears to be rooting for the fintech Davids.