IBS Journal April 2016


investors have had their fingers burned and now have a better understanding of how FinTech solutions really work and the commercial aspects around them.


To use another fairytale analogy, there is a Rumpelstiltskin element to some busi- nesses. What I mean is that investors need to really understand who is powering the products and services behind the FinTech. It’s true to say that some companies are simply aggregators or rely entirely on others’ technology platforms with no real assets of their own. Of course, there can be money to be made from this model but valuations must be made with an understanding of this and not on a wish and a prayer. There will be sustainable FinTechs


in the long-term and as an industry we should work together to nurture these rather than mock the early flotsam.


Scott Thompson: Is the emergence of companies like yourself and various other disruptive startups the begin- ning of the end for the retail


banking establishment? NM: I’m very much enjoying working at the coalface of an industry that is going through such substantial changes but no, we don’t see this as the beginning of the end for retail banking. It’s the start of a considerable period of collaboration and I think banks and other financial institutions are really only just starting to wake up to the possibilities of working with FinTechs. Not only is the end result usually interesting and innovative but the sheer efficiencies of working with agile technology instead of legacy systems means that banks now have more ability to suck it and see. I wouldn’t want to place any bets on


exactly which types of payment solutions become the preferred option in 20 or 30 years time but what is clear that millennials


in particular are really keen to simply try new propositions. These solutions might not be around for ever but it’s important that any financial institution who wants to attract the next generation of wealth needs to continually innovate and be ahead of the curve. By partnering with financial technolo-


gy providers, banks are now afforded the opportunity to take a product to market quickly, assess the uptake and then either build on the success or pull out. If they relied on their existing systems they may miss the moment or risk delivering a substandard product. The future is considerably rosy: non-


bank payment providers and technology enablers such as e-money issuers will collaborate more with traditional financial institutions like the banks to provide holistic payment services, combining the best of the banking system, allied with the flexibility and technology advantage provided by e-money platforms. Even the term banking will continue to evolve with


© IBS Intelligence 2016


changes in the regulations like PSD2 open- ing up the use of APIs and web services.


Scott Thompson: The un- banked and financially ex- cluded are a key segment here. How are payment FinTechs making a difference in this


respect? NM: This is a crucial area for FinTech and one that really lends itself to innovation. As we all know, retail banks have not been quick to support particular groups within society but part of the reason is down to clunky legacy systems and prohibitive costs for both the bank and the end user. FinTech makes this all possible.


To give you an example, the DWP has just announced a new ‘Help to Save’ scheme where employees whose earnings are below a £30k threshold and also on in- work benefits, will receive a cash lump sum if they start to save. This is expected to go live in 2018. Prepaid is the perfect product for this as it enables the recipient to segregate their funds via an online savings


www.ibsintelligence.com 41


the big interview


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