The transition to fintech banking continues. The traditional banking model continues to evolve in 2022
By Hana Skreta, Principal
Hana Skreta, Principal at Miramar, recently attended Money 20/20 in Amsterdam. The flow of information and innovation on show in the fintech, payments and banking sectors was a promise of great things to come for consumer and business money management alike.
Kahina van Dyke from the Standard Chartered Bank spoke at the event, explaining the change in attitude that every organisation who wants to stay sector relevant and competitive must have: “I think people are getting very tied into the lines and the boundaries of what is a bank or banking vs fintech. Every single bank in the world is a fintech company. And if they don’t realize they’re a fintech company they probably won’t be a bank in ten years.” Technology now drives all business and in banking and finance, regulators, investors, consumer commissions and markets authorities are all planning their roadmaps around a digitised market, where there will be no space left for the traditional finance model.
For business, this can be difficult to navigate as every element of the business process is changing. For the traditional banking model, it is a case of rethinking plans and starting again for some; but not all. For the fintech ‘start ups’ it is not a case just of growing up but growing up fast. In some cases what started as a fun app or experiment is now a serious contender for growing and established businesses as an excellent way to manage their money. “Those cute experiments are $10 billion, $20 billion valuation companies now,” says van Dyke, “that have a responsibility in new ways that they really didn’t prepare for. And the regulators are now looking at them and saying wait, do you have compliance? Do you have KYC? Do you have AML? What are your algorithms? How do you identify risk and make sure that you have liquidity? All those boring banking things that they didn’t even really think about when they started out.”
How the next steps in banking play out will be in the hands of the innovators who are leading the next generation of business banking model. Banking will still need the regulators, compliance officers, legal teams and product specialists; the people and teams who have built the foundation of the banking system as it is today. This is important as these roles are the roles that maintain a safe architecture for consumers to keep their money. The interesting and exciting thing is the teams that are starting to work alongside those people. As van Dyke says: data scientists, automation and engineering experts, AI developers and partnership builders who are building the true consumer experience of today’s banking system.
Consumer duty will help create an environment for healthy competition between these firms, encouraging them to be innovative in developing products and services that genuinely meet consumer’s needs. The Competition & Markets Authority (CMA) in the UK recently released a report saying that with more and more customer journeys originating and taking place online, an essential understanding of online choice architecture (OCA) is imperative for all financial firms. Online practices can be categorised, say the CMA, according to whether they “affect choice structure (the design and presentation of options), choice information (the content and framing of information provided), and choice pressure (through indirect influence of choices)”. These elements bring a need for a different type of talent to the banking pool.
Success and great innovation come from great leadership. A humble and inclusive culture where ideas are given space to flourish and grow. Miramar is excited to be part of the conversation and our global team touch so many aspects of what we learnt at Money 20/20 that the future is bright, and we are grateful and excited to be part of it.