By Brett King, Moven, for Finextra
I’ve been in Fintech since before we called it Fintech. Some would say that Fintech has been around for decades, as soon as Bank of America deployed ERMA (Electronic Recording Method of Accounting) in the 1950s, but even though the term was commonplace by 2009 amongst practitioners, the term Fintech got very little industry use until 2013, and then in 2014 use of the term skyrocketed. In 2009 Finextra itself just featured 30 articles with references to Fintech, but by 2014 that number was close to 250, and 2016 has already seen 1200 articles to-date.
In those early days, the people involved in the Fintech “movement” were frustrated technologists that were typically beating their head against the proverbial brick wall in a bank technology or innovation team and would gather online and at early meet-ups at bars and pubs around the developed world to compare the various methods of obstruction that traditionalists within FIs were using to dampen the impact of technology. There was a collective belief within the Fintech movement that everything was about to change, but surrounding them when long-term industry professionals that dismissed talk of mobile banking and branch disruption as more of the same.
At the IBM World of Watson event in Vegas today we heard Thomas Friedman, famed author of “The World is Flat” and “Thank You for Being Late” discuss the fact that 2007 was a major inflection point in human society, because of the introduction of technologies like the iPhone. Meanwhile, within the industry financial analysts like Matthew Lynn at Bloomberg said
“Apple will sell a few to its fans, but the iPhone won’t make a long-term mark on the industry”
It was in this arena that the camaraderie of Fintech was born. A spirit made possible only by working together in the trenches to combat the techno-apathy that was financial services writ large.
Last night I was at dinner with Josh Reich and Shamir Karkal the co-founders of Simple. Due to the nature of neo-banking, Josh and I were asked repeatedly in the press and at conferences how we competed with each other. We had a pact with each other that started with our first meeting at The Plaza Hotel in New York in July of 2010. It was a pact of mutual respect. An understanding that we were both in the trenches taking two different approaches to solving a similar problem, but one centered around the desire to make financial services more accessible, less complex (simple even) and a better experience for customers using technology. As a result, we never really considered ourselves competitors in the classic sense. We always thought we’d be better off focusing our attention on taking customers out of Wells, BofA and others, than trying to undermine each other. We spurred each other on to greater success with each new feature and announcement. A win for Moven, was a win for Simple, was a win for Fintech.
I found a similar spirit of cooperation with the group that we now call the Fintech Mafia. Everyone was there for the same reason, and everyone helped each other find the latest research, leverage network and bounce ideas around about what we should do next. More than a few of us ended up working together in ventures.
But recently I’ve noticed that has changed. As Fintech has become a global movement with tens of billions of dollars in investment annually, and customer reach that is in the billions, we’ve seen it devolve into a typically mature sector where there is infighting, rumors, bad mouthing in the press of other start-ups, etc.
The global financial services sector in 2011 catered for $11 Trillion of global GDP. Today with companies like Ant Financial, Apple, and the27 so-called Fintech Unicorns, we’re approaching a point by 2025 where we’ll see more than 25% of the world’s financial services sector run by Fintechs, or non-traditional technology-first players. Within 10-15 years the largest financial services companies in the world will mostly be tech companies, not incumbent traditionals.
In that future, we’ll need a convergence where Fintechs collaborate more and more. Many Fintechs will have success empowering traditional players in the industry to rapidly re-tool around new technology experiences, but central to success will be collaboration.
When you are re-tooling 200 years of hard coded, paper-based processes, laws, and policies, it takes a herculean effort and focus. We can’t afford to compete against each other when the incumbent players are already working against us (I know this is a generalization also).
There’s no need to slag off at another neo-bank for your new banking start-up to succeed. There’s no need to criticize a commentator’s understanding blockchain against your pure definition of a distributed ledger. There’s no need to start a Donald Drumpf style twitter flame war when someone says something about millennials banking habits that you don’t agree with.
Let’s just get to fixing what’s broken. Otherwise, we’ll end up just like the industries we are trying to fix, introspective and disconnected.
First appeared at Finextra