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NEWS Blurred lines: Finance Disrupted review
FinTechs and incumbents continue to butt heads. IBS Journal attended the Economist’s Finance Disrupted event to check if the sides can ever see eye to eye
Senior Reporter Alex Hamilton
catchphrase that a highway robber, pistol at the ready, might spout at a hapless pair of 18th-century dandies as they emerge from their gilded horse-drawn cart. It’s FinTech taking on the guise of the highwayman, according to this London-based event, which took place in London during January.
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A discussion panel asked whether FinTech’s next evolution is to kill off traditional banking. Sebastien Siemiatkowski, CEO at Klarna, believes that tech companies and banks have very different definitions of what makes a successful company, as well as “what can and can’t be done”. Regulations like PSD2 aren’t finalised and “privacy is being used as an excuse to not innovate”.
Ann Cairns, President of International Markets at Mastercard, underlined the fact that FinTech are friends, not foes. “Any company coming in to make things simple is an ally,” she said. Rob Frohwein, CEO and Co-Founder of Kabbage, noted that there is “a huge amount of arrogance on both sides of the coin”. Banks think they’re the top dogs and refuse collaboration while FinTechs are looking to disrupt the entire industry in just a few years.
Trying to complete with big hitters like Visa and Mastercard is not the right choice for startups, stated Siemiatkowski. Companies need to focus on when they want to collaborate and when they want to try and improve existing services. Cairns agreed; the likes of Google and Amazon “have their niche and they don’t need to build a whole new thing.”
Siemiatkowski twisted Cairns’ agreement by stating
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ollaborate or Die” is the kind of
his surprise at how aggressively banks are pushing Apple Pay and Android Pay considering it erodes their brands and removes the card from the equation. Cairns countered that banks have their branding integrated with the apps, but the Klarna CEO didn’t seem convinced.
Frohwein conducted a quick audience poll, asking who would open an account with Google, Amazon or Facebook. Around a quarter of the room responded favourably. “A few years ago that would have been zero,” he said. There is a blurring of the lines between a bank and a technology company, and that’s to the favour of the latter. Banks are on the defensive, but have the opportunity to “fight back” if they use their brand power correctly.
The topic of Brexit also reared its head. Panellists identified access to technology, talent and capital as the main factors behind a “FinTech hub”. Only Nicolas Véron, Senior Fellow at Brussels-based think tank Bruegel, was straight to the point. Leaving the single market would cut off the UK from a number of factors that keep it at the forefront of the FinTech world.
Philip Coggan, columnist at Economist, moderating the session, asked whether London still has its crown. Is the US sneaking up on it? Eileen Burbidge, special envoy for FinTech at HM Treasury, said no. The USA’s nature as a conglomerate of “48 disparate markets” makes it difficult to deal with.
The crown that London does have, opined Lawrence
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