Fintnews: Firstly, what does Saxo Payments do?
Anders: The short answer is we are a financial utility… we believe the transition in financial sectors is creating a huge digital global market, with many companies delivering financial services. For many of these players it doesn’t make sense for them to develop their own back end systems. What Saxo Payments does is create the infrastructure to enable financial services to be delivered profitably. This includes FX, money transfer, bank-to-bank transfer, everything to do with moving money cross-border.
Fintnews: What do you think the financial world will look like in ten years from now?
Anders: More players than today, that’s for sure. Telcos, tech companies, banks, all trying to get a foothold in the space. Everyone will compete to have the client relationship.
Fintnews: Interesting… the client relationship. That’s the final piece of the pipeline, the infrastructure. The brands delivering the service, from the client perspective.
Anders: Apple, Google, they will probably enter financial services… Amazon as well. It’s a natural way of monetising on the client base they have. We will see Telecoms companies offering banking services, mobile phone operators, Samsung, for example. Traditional perceptions of what a bank is are changing a lot.
Fintnews: What a bank actually is, is changing, can you expand on that please?
Anders: People are slow to change who they bank with… but the way they will interact with banks in the future will be very different from how it is done today. People are starting to use a lot of different services, fragmented services… they’ll pay friends by Facebook, send overseas transfers by Transferwise or Azimo, they’ll use a digitised wealth management platform for their savings, and so on. It’s a fragmented landscape.
Fintnews: That’s interesting, that’s already happening, the ‘one shop for all financial services’ model that was the banks is being fragmented. That’s a good word for it. It’s like each slice of the pie is being offered by a different company, specialising in that particular service. And because these are delivered largely through apps, it’s a perfect fit. Apps are good for doing one specific thing very well. How are the incumbent banks going to respond to this?
Anders: There’s going to be a lot of competition from the banks as soon as the challengers get up to speed… the incumbents are more aware of what’s happening but they’re still developing how they will respond … I expect most people will still have their mortgage with a bank… It’s not about switching banks… it’s about switching services… changing service provider.
Fintnews: Ahhh, that’s a considerable distinction. You’re suggesting people will keep their bank, for the most part, but most of the transactional things they do, sending money, investing, even spending on a day to day basis, and so on, are likely to be done via a different company?
Anders: The client relationships are changing, becoming much less fixed. Digital relationships are easier to switch, to change, to replace, to move, it’s all about the agility the business has to change services to meet customer demands. Challengers come in and identify specialist areas, how then does a bank fragment its services without fragmenting itself?
Fintnews: Very insightful. Talk to me a bit about some principles of disruption, if you would.
Anders: Adaptability and agility are key business traits. Instrumental in a successful business model is the combination of distribution and technology. Changing the distribution model is one methodology for developing disruptive businesses.
If you succeed in completely changing the distribution model… it’s very powerful… especially if using technology. Consider Amazon vs Walmart, or Netflix vs Blockbuster, two examples of a total redesign of distribution. And from the incumbent’s perspective, if this kind of disruption occurs, as soon as the damage is done it’s basically impossible to come back from. Their business model itself has been superseded. It requires a total rebuild and relaunch to adapt.
Fintnews: I see. The delivery of financial services is itself changing, being disrupted, as you describe. What do you think the financial world will look like in fifty years from now?
Anders: It’s completely impossible to predict 50 years. Impossible.
Fintnews: Impossible to predict 50 years, 30 then? Still impossible? 10 maybe? But even then, maybe not. Fintech is 22 years old, as a distinct sector*. It’s probably easier to create the future than to predict it, in this instance.
*Fintnews holds the creation of fintech as a sector as being 13th November 1995, the registration date of Fintech.com
Anders La Cour, CEO, Saxo Payments https://www.saxopayments.com/
Originally printed in the 15th edition of The FintechTimes
