If you are in the finance world you will have heard the word “FinTech” (unless you are having a gap year or are living under a rock), one of the most popular finance buzzwords in use today. Some argue that FinTech may be a bubble – and one that is set to burst shortly – but as a bank or other financial services provider you cannot really end the FinTech discussion with such a superficial assessment.
There is no binding definition of “FinTech”, so let me stick with the definition I have used at several finance conferences this year: FinTech is an industry made up of companies (entities) that use innovative financial technology to provide or support financial services. People also use the term to describe those companies that create the technology to provide or support financial services, so it is very likely that you have already met firms claiming that they are FinTechs themselves.
The big question now is what kind of relationships between banks and FinTech newcomers shall be developed in the coming years?
Being the organizer and chair of #FinTechFriday @ Squire Patton Boggs Warsaw monthly meet-ups, I thought this might be good to ask this question to my colleagues at Alior Bank, one of the most innovative Polish banks, which has even created an in-house innovation lab (Alior Bank Innovation Lab or “AIL”) to make the most of the rise of FinTech (which, as I understand, is usually a goal of such labs). During our latest #FinTechFriday event on 18 November 2016, Mr. Igor Zacharjasz, Startups and Ecosystem Leader at AIL, was our guest speaker and provided his insight on the meeting’s theme: Bank Innovation Labs: FinTech’s Friends or Enemies?
During the meeting, Igor has shared with us some details of AIL (for example, a basic Bank-FinTech joint project assessment period is 100 days within AIL) and confirmed that in his (and his firm’s) view, banks and FinTechs, in most cases, are destined to co-operate, with such co-operation already taking place in many instances. As an example of a Bank-FinTech co-operation success story in Poland, he pointed out Alior Bank’s co-operation with VoicePIN, a Polish FinTech company providing advanced voice biometrics solutions to clients around the world. Alior Bank in co-operation with VoicePIN has launched a smart-collection project using the so-called virtual agent Dronn – an application for which the bank won one of BAI Global Banking Innovation Awards earlier this year.
I also took the opportunity to ask Igor which FinTech types he considered as the most interesting from the perspective of possible co-operation with banks. According to Igor, such cooperation in the coming months is most likely in the areas related to business models based on PSD2 (Payment Services Directive 2), blockchain, artificial intelligence and, last but not least, biometrics.
By the way, Igor’s predictions as to friendly scenario of future relationships between banks and FinTechs has also been confirmed by most of speakers during FinTech CEE Digital Congress which took place in Warsaw on 22-23 November 2016.
The bottom line is that, in my view, we are now in the so-called FinTech 2.0 phase. This means that banks and FinTechs should work together to find opportunity areas within the banking sector and work together to implement such improvements.
To borrow a quote from Casablanca: “Louis, I think this is the beginning of a beautiful friendship.”