While progress was initially hampered by fear – that fintechs would supersede banks – today I believe it is a lack of agility due to laborious procurement processes that is the biggest brake on progress.
The average bank takes between two-and-a-half and three years from first meeting a third-party solution provider to going live. Not only is this far from agile, but it leaves the door wide open for more nimble competitors – including start-ups and platform payments companies.
Banks realise that this needs to change, but they need help – from vendors, government and regulators, preferably also working collaboratively. This is what we’re striving to do at the Luxembourg House of Financial Technology. Backed by the Luxembourg government and the private sector, we offer one of the most cohesive examples of an ecosystem coming together to promote collaboration in financial services.
One of many great examples of the value of collaboration; we are working with Temenos to develop a testing and certification program that will assess and certify fintech solutions in terms of robustness, connectivity and resilience. The goal is to help speed up procurement at financial institutions by removing some of the steps that all banks take when assessing new software.
This is a great start, but more innovative collaborative projects are needed to ensure that Europe is not left behind Asia, a real hotspot of fintech innovation, where scale is rapidly achieved and with solutions that meet customers ever changing expectations – agility in a nutshell.
The next 10 years are going to be critical in financial services. By 2028, a whole new tech-savvy generation will be starting to engage with the sector and they will not do so in the traditional ways. They will flock to service providers that keep banking in the background – life enablers. Satisfying them will demand secure new engagement models facilitated by fintechs and banks working together. When that happens banking won’t be about transactions but about technology – to the great benefit of the consumer.