IBS Journal December 2016
07
“BANKS ARE EXTREMELY TALENTED IF IT WERE POSSIBLE THEY WOULD
AT OBSCURITY. HAVE PHDS IN IT” in our own labs,” he laughed.
Covering the payments sector, Gary Conroy, Managing Director at Realex Payments, stated that the market has seen marked change and disruption with the introduction of APIs and SDKs. At the same time, there can always be more innovation as the major players aren’t being challenged as much as they should be by smaller startups. It’s up to the UK and the EU to foster an innovative culture.
Mark Mullen, CEO of new entrant Atom Bank, pitied the larger players. “It’s harder to build the interface needed for a large bank than to start afresh,” he said. What’s most important, and what he sees as pivotal to the wave of disruption in the industry, is its ability to shift the focus of control from the manufacturer to the customer. The current banking system limits the transparency that users have from their options. “Banks are extremely talented at obscurity. If it were possible they’d have PHDs in it.” Whether the end user is ready to adapt to all the change happening around them is another challenge Mullen identified, as some still cling to their banks despite better options.
“People should be careful on what works and what doesn’t work,” agreed Cellan-Jones. Berman added that products already on the market should be “innovated on”; there are ideas that have “already been taken” that can still be improved. The discussion shifted to a question on data collection and regulation. Mullen spoke up for the UK’s Financial Conduct Authority (FCA), hailing it as one of “the most far-sighted” regulators in the world. The UK is leading the way in creating a space for innovative companies, since “the turkeys won’t vote for Christmas” – big banks need to
be pushed towards innovation as they are “systematically designed” not to innovate.
There will a shift in investing, stated Berman, as banks try to grasp an opportunity they missed the first time around. No longer will equity funds be the kings of startup funding – banks will now start to impose themselves in the investment market. Martin Cook, UK General Counsel for Funding Circle, looked to the future too, in saying that by 2020 banks and businesses will be entirely customer- orientated and will invest accordingly. Cook conjured a pie-in-the-sky image of the industry, one in which both banks and startups work collaboratively to better user experience with a complete evaporation of the “us vs them” that currently exists.
Innovation hasn’t peaked yet, noted Mullen. Payments has been a fat target for banks in the past and will be picked apart by FinTechs in the future. Bigger players will also be forced to squirm when they have to publish their data sets. Things will change when the 2018 deadline for this passes. Littlejohn pointed out the location of the seminar – “capitalism will be about socialism” by 2020, he said, to many chuckles from the audience. Power will be transferred to the consumer.
Cellan-Jones was a dejected figure as the allotted time drew to a close – he didn’t get the chance to ask about the role of blockchain. To a collective groan from both audience and panel he attempted to probe the panel for answers on the new tech. With a few wry smiles and a shifting of bums in seats the table gave vague answers on the topic – blockchain, it seems, will have to wait until next year.
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