Money16

Money16 – Banks evolving more in next 10 years than in past 50!

Our Symbio team recently took part in the Money Nordic 2016 seminar on May 25th, 2016 in Pörssitalo in Helsinki, Finland. The Money16 seminar was very intriguing, and gave a broad view on the future scenarios of the finance sector ecosystem. Over 250 participants from finance companies and communities, Fintech companies, banks customers, consultancy houses and technology players took part in the seminar. The theme we took away – The global market of banking sector is changing rapidly and Money16 provided some excellent insights into that evolution and what companies can do to lead the change.

Harri Nummela, who is leading the digitization and customer experience at Finnish OP bank group, held the opening speech. According to him, OP and banking business in general will change more in next 10 years than it has changed in the past 50 years. Local markets will vanish with the global finance providers, which will then force local banks to expand their businesses to global markets. The latest research shows that over 50% of customer service tasks will be replaced with robots and artificial intelligence solutions in next 7 years. Basically, all banking concept ideas are already invented and now the challenge is, who can make the best solutions first to take over the whole market, Nummela continues.

As an example, a large portion of the new leaders of the digitization like Uber, Netflix and Facebook did not exist 5-10 years ago. These companies are a template for the FSI sector, and there are few obstacles for companies inventing similar digital services for FSI.

PwC’s Fintech development director, Alfy Louis also gave a great presentation, noting that in the United States digital banks are booming, because consumers don’t want to use traditional bank offices. Banks need to have mobile access and young people are looking for the “Uber experience” with their banks. According to Louis, banks are experiencing the worst hangover morning, and the party night is over.

He encourages traditional banks to establish digital banks with new brands, which direct under the digital customer experience the loan applications to parent company’s credit processes. Equally important is to lower the transaction costs in the background and terminate endless, resource consuming zombie projects and move on towards agile banking and project delivery models. Fail-fast models have the potential to work well also in this industry. Take only two of your best service concepts to market of the fifty prototypes you developed, for example!

Next step in FSI digitization will be consolidation. A great example is the Swish system working in the Nordics. It allows real time transactions between six Swedish banks. For some reason, Finnish banks are not taking part in this consolidation. Also, transactions utilizing the Blockchain network technology are an interesting field with several supporters and many professionals in the event are waiting it to breakthrough in the near future.

Finance giant Citigroup also shared their view of what will happen to companies who cannot or do not adapt to digitization. According to Citigroups’ Fintech analyst Josh Levin, the younger generation in the western world is already bored with the stiffness of current banking services. There is no reason why getting a mortgage or opening a bank account takes as long as it does, and requires the level or paperwork it currently does. The latest research shows 70% of 20-30 year old Americans prefer going to the dentist over a bank. Young people feel banking services should be as easy as ordering coffee at Starbucks, which allows you to order and pay for the coffee with mobile applications in advance without queuing.

Big Chinese Internet companies like Alibaba, Baidu and Tencent have made significant investments in the finance industry and they are already big players in e-commerce and electronic payments. According to Citigroup report, these new players already have more customers than larger global banks. The services they offer to Chinese customers are easier to use, faster and cheaper than the services of traditional banks.

Accenture’s Ilkka Ruotsila also highlighted how payment service directive PSD2 is the largest change within the banking sector, allowing Fintech companies to bring their services to the market. The risk for traditional banks is to become background players like power grid companies. 30% of the traditional banking business is estimated to be compromised in this new market environment, and there are several survival strategies and potential ways to tackle the changes.

Wayne Gretzky said once ”Excellent players don’t skate to where the puck currently is, but where it will be”. Gretzky’s wisdom applies also to banking business ”Don’t stay where the money is, but where it will be”.

If you are interested in learning more about FSI, Fintech and financial innovations, download the Symbio IoT Data sheet today! You can also contact us anytime at marketing@symbio.com; we’re ready to help bring your innovation to market!