– by Pius v. Bienz, Project Manager BAICC (Bank Innovation Competence Center) HEC Lausanne, Sr. Project Manager @ BEI St. Gallen
Key take-aways from this conference
- More and more Fintechs are adjusting their strategic positioning from B2C to B2B, trying to establish co-operations with traditional players instead of aggressively confronting them.
- This strategic switch represents the end of the fintech bubble experienced during the last few years. What will stay are the consumer expectations with regards to speed and ease of use when purchasing financial services.
- Teaming up with fintechs will not solve all the issues established players encounter with digitalization. For incumbents, the main challenge resides in the ability to adopt a digital culture.
The organizer – High-Tech Connect Suisse
The conference was organized by Ralf Haller from High-Tech Connect Suisse the goal of which is to “bridge the gap between the world’s leading high-tech innovation ecosystems and trends”. It has proposed other conferences on digitalization topics such as machine learning, big data, etc. Among its other activities, High-Tech Connect Suisse offers so called Ecosystem Trips to digital hot spots such as Silicon Valley or Silicon Wadi (Israel).
In addition to a roundtable discussion, the program of the conference was composed of presentations given by digital experts as well as by international fintechs among which TransferWise, the London-based unicorn focusing on foreign-exchange money transfers. In addition, local start-up companies, presented by F10, the fintech incubator & accelerator program launched by Six, were invited to pitch. Among them was Billte, a Zurich-based start-up suggesting simplifying invoice management both from a SME and a consumer point of view. (A short summary of some of these contributions will be posted later.)
Throughout the different contributions of this event, four topics kept coming back:
- To no surprise, the fintechs present provided many illustrations of how they disrupt the financial industry by addressing specific elements of the financial value chain with the aim of simplifying it and of removing inefficiencies. As pointed out by Heinrich Zetlmayer, investor and board member of Lykke, the blockchain-based fintech located in Zug, his company’s quest to build a “global marketplace on the blockchain to trade any type of financial assets” is based on the observation that today’s financial markets involve too many intermediaries and, therefore, are too cumbersome. Quite explicitly, Edward Dowling, Product Manager at TransferWise, stated the goal of his firm as wanting to “remove inefficiencies in banking”. In particular, he demonstrated how the set-up time of a new start-up could be drastically reduced using his company as payment services provider.
- More and more Fintechs are adjusting their strategic positioning from B2C to B2B, trying to establish co-operations with traditional players instead of aggressively confronting them. Not all of them state to be the “friendliest fintech to incumbents” as mentioned by Eric Mouilleron, CEO and founder of Bankable, the London-based fintech architecting global innovative payment solutions. Similarly to TransferWise, Bankable puts forward its API (advanced programming interface) that should facilitate the integration of its services into traditional bank systems. In what concerns the integration aspect, Quantoz, the Dutch blockchain company, goes one step further by connecting IoT payments with financial systems enabling Things-as-a-Service business models. As Henri de Jong, Head of Business Management & Operations explained, this quest represents the basis of the collaboration Quantoz has established with UniCredit in Germany.
- For the participants of the roundtable discussion, the strategic switch from a B2C to a B2B strategy performed by many fintechs, represents the end of the fintech bubble experienced during the last few years. What will stay according to Michael Stemmle, founder and owner of additiv, the Zurich-based IT services company for the finance industry, are the habits the consumers have adopted during that period with regards to the speed and ease of use which pleased them when interacting with the websites of fintech companies and other representatives of the digital economy. This new way of interacting with the end users also has consequences on the internal processes in operating that need to become more efficient and generate less cost. Therefore, the trends towards process automation will continue which might lead to job losses in bank back-offices, according to Adrian Buehrer, digital entrepreneur and CEO of Swiss Life Lab.
- While the number of co-operations between fintechs and traditional banks is expected to increase, teaming up with fintechs will not solve all the issues established players encounter with digitalization. During the roundtable discussion, participants agreed that the main challenge resides in the ability to adopt a digital culture. “It’s a mind game” said Adrian Buehrer, “often, bankers mentally cannot fully engage”. Michael Stemmle explained that this resistance to change lies in the fact that, by nature or by training, bankers are prudent and “loss averse” which might not be the best attitude in an innovation or entrepreneurial setting…
In a nutshell, fintechs will pursue their work of disruption of the financial value chain, but more in cooperation with banks and by providing innovative services to them. Nevertheless, this will not solve all the issues established players experience with digitalization, since a key success factor for banks is being able to establish a digital culture which remains a challenge.