The Xceptor Blog

5 things we learned about the evolution of Fintech, Big Tech and Banking

18 September 2019

5 Minutes read time

This week we were lucky enough to grab some time with well-respected journalist and editor Heather McKenzie. Over the years, Heather has interviewed a wide range of people from every type of firm in every continent and has developed a unique perspective of where the industry could be heading. Here’s what we learned.


The privacy paradox


The topics unveiled by the Cambridge Analytica scandal in 2018 will continue to reverberate. The paradox of the data-driven world we live in is that data can be used in ways people aren't aware of and are scared of. They are unclear as to who owns it, who is accessing it but there is also a strong siren call of convenience provided by apps and devices that people find hard to resist, so they continue to share their data even though it might come at a price. In China, consumers are more comfortable with the Government accessing their data than a private company, whereas that would be the reverse.


China as the picture of future of banking


A picture of the future of banking may be emerging in China at the moment. For the past few years the Central Government has been pushing the techs to become tech providers rather than financial services providers. What that means is when a loan comes to a tech firm such as Ant Financial it will be syndicated through bankers and sit on the banks balance sheets rather than Ant’s. In this model the banks will bring trusted balance sheet liquidity that can be applied to different customer scenarios and big techs can provide credit ratings of individuals and SMEs. These are based on traditional data points as well as an understanding of what their social media behaviour tells us.


Competing and collaborating with fintechs


SEB’s Paula de Silva recently commented to Heather that she believes banks should be working with the big techs and fintechs to connect the competencies in their world with those of the banking world. While this remains a big leadership challenge, Sibos is also embracing fintech providing the opportunity to discover the connections and collaborations, the innovation that is prevalent in the industry. Talent remains a hot topic with financial institutions competing with both big tech and fintech and this has led some banks to realise they need to change their recruitment policies and source from different institutions and different backgrounds. They have to get across, she says, that working for a bank can be fun, they have a lot of data and the opportunities are there.


Reskilling is crucial as banks will always need human expertise


Automation and AI can’t be seen as only a way to simply reduce headcount, rather as a way to differentiate and augment. Retaining great talent remains an imperative; seeing AI as a way to release your team from the mundane and give them the opportunity to work on the more interesting, can only lead to win/win scenarios. If employers are truly invested in change they have an obligation to ensure that any digital technologies are implemented in a way that, as well as improving their customer facing businesses, they also promote and accelerate internal change.


The long running soap opera: Rubbish in. Rubbish out.


One topic that Heather has been covering since she was a rookie journalist is the concept of rubbish in rubbish out and the search for The Golden Fleece of data. You used to be able to just throw bodies at the problem of data disparity, but the exponential growth in data and requirements from regulators means that isn’t still an option. Strong data governance, management strategies and infrastructures must be in place and formalised, which isn’t easy and needs sponsorship across the divisions and at a senior level.


To tap in further to Heather's unrivalled knowledge listen to the full podcast here and, for great insights into what is dominating discussions at Sibos (based on Heather’s 27 Sibos attendances to date), go to her publication The Club.