If there’s one thing you can bank on, it’s that institutions with hundreds of billions of dollars in their war chest won’t go down without a fight. For tech watchers focused on the growing and massive disruption of the traditional financial services sector, there was one panel to watch at the GROW 2015 conference panel in Whistler yesterday, ‘Blowing up Banking: How Tech Partnerships Can Change Financial Services’. Moderated by Andrew D’Souza, the panel included Stephane Wyper, Global Lead at MasterCard and Gabriel Woo, VP Solution Acceleration, RBC; it started with a bang, with Souza asking whether banks are scared of technology – and whether they should be.
“I’m horrified at the thought of us not recognizing the need to adapt and really innovate,” Woo said. “The thing I’m scared of is complacency. Creating roles like mine is a signal they recognize the need to be more agile and able to adapt.”
“I’m horrified at the thought of us not recognizing the need to adapt and really innovate.”
Woo added that a lot of banks are asking themselves whether they need to be technology companies – but maybe that’s the wrong question. “Does Apple think of itself as a technology company, or as a product company? We want to think about how we leverage technology, so we serve clients in the way they want to be served today.”
A common theme throughout the discussion was that no one has a monopoly on innovation – and financial services firms can embrace startups and support technologies to offer more of what their customers want.
— GROWConf (@GrowConf) August 19, 2015
The question was also posed as to whether the current disruption in the FinTech sector – with so many startups tackling payments and other sectors of banking offerings – began with the financial crisis?
“I’ve heard this school of thought, relating to why there are so many more of the financial tech companies in the USA and Canada – and that maybe it’s because there were so many who left the banks in the USA, while in Canada, the banking sector was relatively unaffected,” Woo said. “I don’t know if that’s true – but either way, the technology and innovation we’re seeing is not happening just all of a sudden. Banks have been adapting to this for a long time – but certainly, the space is changing at an accelerated rate.
“There are many reasons for that: the greater accessibility of computing power in your handsets, much less on your desktop or laptop, is changing things. The ability to crunch data in a real-time way, connectivity with broadband, a whole bunch of things are coming together.”
Ultimately, the challenge is to use these advances to help personalize and create textural, intuitive experiences for customers.
“There’s too many instances where we’re sitting with a company and they’re pitching and there’s no clear value there for us. We’re not sure how we can collaborate.”
That can be a tough proposition for a big, $20 billion firm that can’t exactly turn (or pivot) on a dime. “That’s why we’re working to get more connected to entrepreneurs and innovators,” Woo said. A big part of the challenge internally is just finding the right people to do that job – which can be a bit difficult in an organization with 79,000 employees globally.
D’Souza then asked how startups that want to partner with banks and credit card companies to help foster innovation from the outside-in can win these relationships.
“Entrepreneurs who have a very clear idea about the value they bring and the pain point they’re solving are the ones that we want to work with,” Woo said. “There’s too many instances where we’re sitting with a company and they’re pitching and there’s no clear value there for us. We’re not sure how we can collaborate.”
The solution. Do your homework – and find the right person. “I’ve had people contact me and tell me they know I’m not the right person, but they’ve looked on LinkedIn and they want to confirm that someone else is the right person. If I can see they’ve done their homework and can show the value, I’m more inclined to connect them.”
Startups looking to partner with big institutions often face a dilemma of sharing their idea or protecting it, to make sure no one steals it. “It’s often better to share and find out how we can work with you.”
Wyper added that at MasterCard, he sees a lot of pitches where he asks,”what would this look like? How would we do this?”
“There needs to be more of a focus on execution,” Wyper explained.
Wyper also noted that for Canadian FinTech companies looking to grow big, the obvious answer to where they should expand isn’t always directly to the south in the USA. “Taking a global view is important,” he said, noting that in parts of Southeast Asia, where traditional and credible financial institutions don’t really exist, at least on the same scale as in Canada, a private telecom company might take on the challenge of helping customers move money. In such financial ecosystems, it may be easier for startups to stake out territory.