Oracle and Nasdaq put together a high profile Financial Services Innovation Summit last week in Boston and New York, and we at Difitek were glad to share our insights on stage at the Nasdaq about where enterprise fintech adoption is happening and what we are expecting around the world.
We specifically talked about new business streams and monetization strategies, and how ecosystem strategies will dominate. By ecosystem strategies, we mean the partnerships with specialized service providers to deliver unrivaled client experience.
Jim Marous from the Financial Brand held a fantastic keynote to set the stage for disruption and the call to action for how the future’s consumer will demand us to revolutionize our approach and even ourselves. We also heard from leading authorities at Citi, J.P. Morgan Chase, IPSoft and of course, Oracle’s experts in financial services and fintech.
Discussions revolved around several themes and the brilliant panelists shared insights from rolling out digital operations across the world and partnerships with tech challengers, but I wanted to take a moment to summarize some of the main points and attempt to put our thumb on the pulse, especially as it relates to enterprise financial services and digitalization.
Here are 9 takeaways from the event at Nasdaq in Times Square:
- Ease of use equals adoption – users are willing to pay for ease of use and if a service is easier than the alternative, the user will be sympathetic to most everything else.
- No longer are there dual channels, analog and digital. There’s only one channel.
- Banks need to focus on delivering value, and when they do, feel good about charging for it. An example given was about funds availability, being able to access deposited funds right away is a premium service, if the free service is to receive full access in three days. *
- Focusing on competing on features is trivial, value will come from a subset of the most critical functions. We heard an anecdotal story where a digital challenger was able to compete with only 20% of the feature sets of its competitors, given that 20% was crucial to the users and executed far better than its rivals.
- The US is still an island in financial services, yet even that island will find it hard to justify transaction fees where new systems do fine and faster without such friction. We challenge each and every person to strip away their preconceptions and ask themselves, what current friction is truly justifiable in the long term? If we’re truly honest, that list should be very short.
- Business models are changing, but so are positions. Competition is not big tech vs big finance, it is bottom up, top down and horizontal. The biggest competition is that of peers amongst themselves, where technology brings an unprecedented edge in competition.
- Blockchain results in flashy headlines, and while every bank has a dozen or so pilots ongoing, few have blockchain or DLT solutions in production. It’s easy to simplify and even group blockchain into a category with cryptocurrencies, yet some of the worlds largest exchanges (e.g. the Swiss Stock Exchange and the Australian ASX) are creating digital exchanges in order to be able to provide frictionless, real time clearing and settlement and do without traditional requirements such as holding billions in collateral. Blockchain is not only smoke and mirrors, in the enterprise it holds streamlining and new business potential in the billions.
- Fintech is making its way from operations and client facing, to the core within institutions. Impact there may be far larger due to sheer size, yet due to the layers of protections and safeguards in place at the very core, it takes adopting the right approach to be able to address internal operations comprehensively.
- Ecosystem strategies are going to be the norm, yet it will take an effort in getting the culture right to adopt partnerships where banks no longer control each step of the value chain. Yet this is logical, the bank cannot be expected to be the #1 at each step and ultimately the client will only care that they get the best value to them, not the details of how it is provided. With the bank in the client interface, the value proposition and user experience will reflect glowingly on the bank itself.
* I needed to put an asterix here to note the absurdity of this proposition (point 3). The use case is depositing your own funds, to your own bank account – why would you not have instant access to your funds? This example is very US centric with its checks, yet the proposition is absurd for a digital native. If someone else holds your funds, why aren’t they paying you? Some of these preconceptions around existing models are so engrained in our thinking, that we don’t even think to question them. Gladly having a global perspective shows regional differences and brings these types of ‘mental traps’ to light.
We want to thank both Oracle and the Nasdaq for including us at Difitek into this discussion, as well as the fantastic audience, speakers and panelists for the very frank and insightful discussion. We all agree the future of financial services is different than the past and we’re looking forward to working with leading innovators in delivering on this challenge.
Internationally awarded digital finance entrepreneur, active in pioneering new securities models worldwide. Has worked in digital finance since 2009, recruited over 100 individuals, built up a operations on six continents and been recognized as one of the top 100 thought leaders in crowdfunding. Markus has pioneered new funding models in the US and Europe, advised policy makers worldwide – including the SEC, the European Commission and Italian regulator CONSOB – for more effective markets, and worked with visionary organizations such as the World Bank and the Kauffman Foundation to improve frameworks for digital finance. Markus has studied computer science and economics (M.Sc).