IBS Journal November 2017 EDITOR’S NOTE BANKS MUST CONCENTRATE ON CUSTOMERS, NOT NERDS


ONE OF THE BIG THEMES OF THE RECENT SIBOS AND MONEY/20 20 CONFERENCES HAS BEEN THE RELATIONSHIP BETWEEN FINTECHS AND BANKS. WE TAKE A LOOK AT HOW THESE PARTNERSHIPS ARE NOW DEVELOPING.


Bill Boyle Senior Editor


billb@ibsintelligence.com


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n this issue we cover our road trip to SIBOS Toronto and Money20/20 Las Vegas, both territories suffering or, in most cases, enjoying their unseasonably good weather.


We carried out dozens of interviews – which you will be reading on our website, but mainly in the pages of your exclusive journal – with the major banks, fintechs and of course, the major vendors.


For me, one of my most interesting discussions took place with an Irish fintech on the flight home from Las Vegas. As they say - money never sleeps, and the flight was lost in discussions.


So what were the major themes of the two events? As our Big Interview with Deutsche Bank shows, the big banks are busily hoovering up the talent pool in the existing fintechs but in a very different way to that of, say, Microsoft who used to buy up and silence all the smaller firms which were either a threat or had great technology they could use. Think NextBase and NetWise in the early nineties. They bought a total of two hundred and six companies.


So while the fintechs have been spending lots of money in PR campaigns, the banks have been spending their time working out their long-term strategies and executing them. This bodes well for banks such as Deutsche which has a very clear roadmap into the future - watch these pages for insights as we spend more time with them.


The big theme for fintechs and banks was partnership. And it seems like a real partnership. This is a very shrewd move for the big banks. It means they will head for the really quality firms


which are not just out to make a quick buck - the quintessential move for the typical Silicon Valley fund managers and venture capitalists. The focus is on working with these companies to help them become real experts in their fields, and widen and deepen their focus rather than dilute it. If the fintechs know that they are part of a really big, nurturing eco system, they are far more likely to retain staff and further nurture real tech talent who know the banks have the ability to give them long-term careers.


What is interesting is that Microsoft, after buying up all its ‘enemies’, then switched its strategy to investing in companies, and from March 1990 took stakes in over 60 companies – a trend which we are very likely to see the banks adopt as they find out which fintechs are likely to A) provide real value and have ideas which have legs and B) have good enough management teams to ensure that they can survive.


This last point is important because, whether it was said overtly or not, the banks really want to get out of the tech business. So while for the present it looks like they are happy to be up to their elbows in nerds, this is the last thing they want to be doing long-term. They know they need to get back to what they do best, and they also know that one of the great benefits of the fintech revolution, which they must roll out, is making it easier for customers to do anything they want via their smart devices. This includes changing banks.


As Open Banking becomes mainstream, the public will quickly judge their bank by its ease-of-use, and when it is found wanting the new open environment will make it very easy to switch banks. Now is the time for banks to concentrate on the customer – not the nerd.


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