The brand new fancy book about fintech
By Vladislav Solodkiy, Managing Partner at Life.SREDA
Why you should hire an artist to build fintech bank?
The First Fintech Bank’s Arrival
The author is talking about fintech bank – please, do not confuse this fundamental concept with online-, neo- or challenger banks! In principle, online banks provide an interface for opening and managing accounts and deposits, as well as issuing banking cards. However, the financial services spectrum is huge: transfers, micro-\P2P-\P2B-lending, crowdfunding and crowdinvesting, online-trading, personal financial management, etc. In the short term, no player can deliver 10 and more major products in a set for retail and SME clients.
Every startup has its piece of the puzzle and piece of the “market pie”. Most exit strategies in the market look like “to be acquired by a major bank, telecom or Internet giant”, which by the way have a profitable core business (with other elements). Just imagine how many products (customers, turnover, etc.) will have a fintech bank built by combining 6-8-10 successful fintech services! It would be very convenient for customers, simplifying the problem of choice and improving the services combined together.
Moreover, it would solve many problems of these fintech startups: their market share and “premium for leadership”, a variety of monetization methods, improved cross-sales, increased margins and profitability, integration of services based on new technological platforms (rather than old bank IT infrastructures!). It’s like the introduction of Tesla: a completely new ecosystem of modern services creating new consumer experience! But it’s not just an electric motor inside an old well-known car brand or other services like charging stations, with(out) dealer service and 24-hour customer support based on big data provided by an old market player.
In chapter 3.5 Solodkiy is talking about why traditional banks are not so successful with their “replications” of neobanks – and he is giving them an advice to hire an artist for better understanding of their (future) customers to build something useful finally.
“I’m not a driven businessman, but a driven artist. I never think about money. Beautiful things make money.” Lord Acton
3.6 Why you should hire an artist as your next business consultant? The modern CEO should be “Designer-In-Chief”
“Coming from a background in Marketing & Advertising, what made you transition over into the fintech industry?” – I get this question a lot .
In the early 1900s, large organizations needed another type of CEO : Chief Electricity Officer. Before there was an accessible and reliable power grid to plug into, organizations that needed electricity employed a CEO to make sure they had steady and cheap access to this vital commodity. Now CEOs who are able to implement design thinking approach  will become Chief Innovation Officers too. Those who fail to implement “useless liberal arts” will become extinct, like the Chief Electricity Officers of the past, along with their businesses.
Anna Pickard , the 39-year-old Slack’s editorial director, earned a theater degree  from Britain’s Manchester Metropolitan University before discovering that she hated the constant snubs of auditions that didn’t work out. In less than two years Slack Technologies has become one of the most glistening of tech’s ten-digit “unicorn” startups. If you’ve used Slack’s team-based messaging software, you know that one of its catchiest innovations is Slackbot, a helpful little avatar that pops up periodically to provide tips so jaunty that it seems human. Such creativity can’t be programmed. Stewart Butterfield , Slack’s 43-year-old cofounder and CEO, is the proud holder of an undergraduate degree in philosophy from Canada’s University of Victoria and a master’s degree from Cambridge in philosophy and the history of science.
“Studying philosophy taught me two things,” says Butterfield, sitting in his office in San Francisco’s South of Market district, a neighborhood almost entirely dedicated to the cult of coding. “I learned how to write really clearly. I learned how to follow an argument all the way down, which is invaluable in running meetings. And when I studied the history of science, I learned about the ways that everyone believes something is true–like the old notion of some kind of ether in the air propagating gravitational forces–until they realized that it wasn’t true.”
The more that audacious coders dream of changing the world, the more such companies like Facebook and Uber need to fill their companies with social alchemists who can connect with customers–and make progress seem pleasant.
John Maeda is a bellwether for the design industry . His tenure at places like the Massachusetts Institute of Technology, the Rhode Island School of Design, and at the venture capital firm Kleiner Perkins Caufield & Byers illustrates his prescient understanding of where design is going, and his innate ability to get there first. He wrote : “People are often surprised when they hear that I earned my master of business administration degree, or MBA, as a side-hobby while I was a tenured professor at MIT.” “Fortune 500 companies are beginning to use human-centered design to think about problem solving rather than traditional hypothesis testing, which is why we are seeing more than 10% of Fortune 100 companies place design as an executive priority. Creativity is becoming a strategic lever to create a competitive advantage in the corporate world. That explains why management consulting and strategy services firms are acquiring design agencies at a rapid rate. 42 design firms have been acquired since 2004, half of those in the last year alone.”
“I am not a businessman, I am an artist.” Warren Buffett
“With all top ten U.S. business schools having student-led design organizations, perhaps in the future the largest number of designers in new industries will come from business schools.” In his wide-lens look at the industry, Maeda doubled down on his original thesis : That big businesses want, need, and will pay for design. Maeda closes on a slide highlighting the “Three Kinds of Design” currently at play. There’s design (“classical design”), business (“design thinking”), and technology (“computational design”). But “there’s a gap between what tech needs and what the programs are creating,” Maeda says. “Business schools can’t move as fast, so students are making design clubs in their schools.” Last year’s report celebrated the proliferation of student-led design clubs at MBA programs like Harvard, Wharton, and Stanford; it seemed like a harbinger of more sophisticated design education.
When John Maeda  landed in Silicon Valley in 2013 to take on a new role as a partner at Kleiner Perkins Caufield and Byers, he didn’t have a car—or even a place to stay . But instead of booking a hotel, he decided to navigate Menlo Park via the sharing economy. “People said, ‘Oh, you must be learning so much in Silicon Valley from all the CEOs,’ ” he says. “And I’m like, ‘No, I’m learning through Airbnb hosts and Uber drivers.’” On blending the arts and technology he mentioned : “I can see now that the best startups today can no longer compete with technology. They need the creative part. They need the design part. Billions of dollars are being invested in companies that are led by designers, led by artists, alongside technologists. It’s a great time for the arts.”
As Drew Gilpin Faust, President of Harvard University, told : “Let me invoke one of Silicon Valley’s heroes, Steve Jobs, who would show a slide of two “street signs” at an intersection: technology and liberal arts. This was someone who turned to design as the critical differentiator for a technical product. The liberal arts were very much a part of what enabled him to be as innovative and as inventive as he was.” Elena Evgrafova, chief-in-editor of Harvard Business Review Russia, wrote : “Reading of smart books and discussing them imparts a special quality to the mind. I would call it an ability to see a picture of the world in all its complexity. A talent to identify internal laws and drivers distinguishes a smart person from a fool. And, it seems, intelligence depends not so much on innate speed of chemical interactions in brain, but on habit to think outside the box, to consider different approaches, to come to conclusions without reliance upon authority’s opinion.” “Reading of thick, complex books like these of Faulkner helps one to release his brain from pressure of conventional schemes and concepts.”
In 2005, Dax Dasilva founded fintech-startup Lightspeed, a provider of point-of-sale software. Over the next six years, it became one of Canada’s fastest-growing companies. In 2011, Dasilva bought what he calls an “amazing warehouse space”  in a hip part of Montreal called Mile-Ex. Previously owned and lived in by a film producer, the space had an outdoor pool theater and a “great vibe” overall. By fall 2014, Dasilva began to commit considerable time and his own funds into transforming the Mile-Ex space into a cultural nonprofit called Never Apart. “We’re in the spirit of Norwood, in that people come to exchange ideas, but we’re less of a social club than Norwood,” says Dasilva. Ultimately, Never Apart shares more DNA with alternative art galleries and music production studios, he says.
“The liberal arts connect with a person’s authentic self,” says  Mary Raymond, associate dean of students and director of Career Development at Pomona College. In that view, a liberal arts education is as valuable as it’s ever been, for much the same reasons its advocates have put forward for decades. For students, that means figuring out how their passions connect with other, real-world opportunities. “I wouldn’t say go study classics and religion and read all summer,” Raymond says . “Take a coding class. Take something that challenges the other side of your mind.” The next generation of workers will need to keep exploring, adapting, and broadening their experiences—something a liberal arts degree has always offered great training in.
“I didn’t want to be a businessman, because all the businessmen I knew I didn’t want to be like.”
Sean Monahan explained why organizations are turning to artists when in a brand-identity existential crisis: “Culture is changing faster than ever. If you want to understand what that means, you need more than someone … who can lead you through the cultural shifts  in real time and who are actually engaged in the production of culture.” Greg Fong broke down the challenge of using standard marketing research: “Everyone who is using the same market-driven data are coming to the same conclusions, and they realize there isn’t a competitive advantage to using the same information as everyone else, so they turn to outsiders who are thinking outside of the profit margin to show them their blind spots.”
A century ago, the CEO was a fearsome whip-cracker. Fifty years ago, he was motivator dangling corporate incentives. And now, according to the 2015 Wolff Olins Leadership Report , the CEO has evolved into something new: The designer-in-chief of corporate culture, a mentoring figurehead who gets into the trenches with his employees and inspires them to create the next great innovation.
Now that the organization applies design thinking, ING also  will be able to actually meet the customer’s demands now and in the future. “This is because design thinking forces you to constantly check if a change you are considering really fulfills the customer’s needs”, says Hill. “For instance, we observe trends like blockchain, artificial intelligence and robotics. How do these technological developments influence our business? To answer this question, we have developed a tool kit which we use for our own organization, but also to help our clients. After all, many of those developments influence other markets and industries as well. It feels amazing to help other companies with a tool which we initially created for ourselves.”
Billionaire investor Mark Cuban offered a perhaps bleak prediction  on the future of jobs in an interview: “No finance. That’s the easiest thing — you just take the data have it spit out whatever you need. I personally think there’s going to be a greater demand in 10 years for liberal arts majors than there were for programming majors and maybe even engineering, because when the data is all being spit out for you, options are being spit out for you, you need a different perspective in order to have a different view of the data. And so having someone who is more of a freer thinker.”
When I started thinking about fintech, reading articles, to meeting with people – the industry was very small. In fact, even the word “fintech” didn’t yet exist. VCs didn’t want to invest into fintech – because it was “too risky” (to be focused only on fintech), “without huge opportunities in the future” (99,9% of the guys I met didn’t believe that fintech would have grown into such a big industry), “too difficult to enter” (entry price to the industry is very high, and your initial knowledge has to be deeper than just the basics of e-commerce, messengers, social networks, etc).
I started to educate myself about several terms such as “branch of the future”, “multichannel distribution” and “new internet services for financial industry” as a hobby, in my spare time. And I started to share my ideas verbally, via social media and by writing articles. I remember sometime later when Sergei Leontiev [our first LP and my mentor] on the discussion asked me, “Why aren’t you investing in fintech?”. I answered: “That’s because I am not an investment type of person and I have never invested in fintech before”. And he answered: “Ok, nobody has really invested in fintech before. But you have the “sense of fintech”, and insights about demand and trends. I find them more useful than the experience of other investment people, who don’t have the passion.” This listener soon became my strategic partner. He first handed me $10M to ‘try’, to test my capabilities. Then, I received $30M more. And we made many great deals after.
Right now, hiring marketing or design professionals are very common: McKinsey just bought design agency, Kleiner Perkins hired John Maeda. When a startup is small and just starting out, the company focuses more on the design and marketing of their company, to attract the attention of their customers, rather than understanding financial models. Design emphasizes that marketing attracts attention – not financial models. Steve Jobs once said: “I am not a businessman, I am an artist in a suit of businessman”.
I am not saying that the financial models are not important – due diligence, competitive analysis, structuring of deals: all of these are extremely important too. Life.SREDA’s partner, Igor Pesin, covers all these questions, he is a superstar in this area. We are like “yin and yang”. I am all about the dream, he is all about realizing the dream.