At the June CSFI breakfast round table we discussed some of the recent technology and market innovations in the Fintech industry. In fact, it wasn’t a round table at all – there were so many attendees that it ended up more like a lecture theatre layout. Credit to the panel for keeping the conversation two-way with the audience.
CSFI round tables are always interesting, and due to the Chatham House rule, I can only report on the main headlines and not who said them.
The key points were Blockchain, fintech, regulation and other innovation.
- Bitcoin itself is too volatile as a currency, but Blockchain is a great technology.
- Third party Blockchain implementation still have a form of third-party centralisation concept, which goes against the key concept of Blockchain
- The cryptography and government intervention is an issue
- Blockchain is still looking for its killer app. I don’t agree with this – it’s like saying relational databases (SQL) or spreadsheets needed a killer app to become popular
My major gripe in the session on Blockchain was the amount of Blockchain ‘experts’ saying “Well I’m no expert” and “From my understanding…” – some of these experts clearly hadn’t used Blockchain or even Bitcoin before.
- A recent Accenture report claims that technology investment in the Financial Service (aka Fintech) sector has tripled
- Everyone has their own definition of what Fintech is. We agreed that the best definition is: “Using technology to disrupt existing business models”
- The Honduran government is using Blockchain for land registry
- AirBnB and Uber have set up alternatives to heavily regulated industries… and vitally – consumers LIKE them. Consumers are comfortable with the risk of using these unregulated marketplaces, which their industries are waving their hands saying “It’s not fair”
- Marketplaces such as Uber, eBay, Match.com and crowdfunding sites take an interesting turn when established institutions start using these platforms – and it’s now happening in the peer-to-peer lending marketplaces
- One of my favourite comments of the morning was “Traditionally it takes 10-15 years for an industry to reach an oligopoly status with 5-6 key players. In the tech business it takes less than 5 years.”
"Traditionally it takes 10-15+ years for an industry to create an oligopoly. With technology it takes less than 5." Quote of the day #csfi
— Bradley Howard (@bradbox) June 1, 2015
- The Open Bank API will enable third parties to access consumer data – with permission – opening up a new form of commercial models for banks
- There are different views from the regulators in the UK, EU and US (among others) and there’s unlikely to be a globally accepted regulatory view
- The new European Data Protection fines may apply to a percentage of the total global revenue of a company – irrespective of where that company’s headquarter is located
What to look out for
The view in the room for disruptive technologies included:
- Regulatory sand boxes
- Consumer-controlled data (aka consumers taking control of their own data again)
- European Data Protection and information security
- Open APIs for insurance companies – or in general, insurers catching up with the banking industry in the technology space
Overall the event was interesting and well worth attending. There was a good cross-section of vendors, IT consultancies, start-ups and institutions (such as banks). I don’t understand why there aren’t more institutions to keep their fingers on “the market pulse”, and why many of the people attending haven’t used the technologies that are being discussed.