Like so many of the the fintech flock, I am about to make my annual Fall migration to Las Vegas for the Money20/20 conference. I am looking ahead to what I hope to see there, which is how fintech is becoming more and more embedded into customer experiences and customer expectations, and how financial institutions are using fintech as a differentiator. The Capgemini/EFMA World Retail Banking Report surveyed 14,000 consumers worldwide and found that nearly two-thirds said they were the customer of at least one fintech company.
I am also reflecting back on the other banking and fintech events that I’ve been to over the last couple of months— Finovate and Next Money in New York, Sibos in Geneva, BAI Beacon and the Fintech Stage in Chicago, and keynoting at three different banking conferences with groups from Massachusetts, Missouri, and half the country with the Federal Home Loan Bank of Des Moines. Plus scores of private meetings with bank and fintech executives along the way.
Besides a digital wallet full of frequent flyer miles and a backpack full of Hudson News and Cinnabon sales receipts for my accountant, the main thing that I picked up in my travels is that my industry innovation maturity map of Leaders, Learners and Laggards is evolving, but still valid.
Leaders, Learners and Laggards Revisited
When I developed the maturity map a coupIe of years ago, I defined financial institutions that were Innovation Leaders as those that prioritize innovation as a necessary business activity and support it top-down, bottom-up, inside-out and outside-in. At this stage of evolution I am seeing another difference from Leaders. They also see fintech as a force for redefining business models and improving customer experience.
The small group of Learners in the middle is growing bigger, as more banks are realizing the need to keep up in this era of digital disruption. The same Capgemini/EFMA report also surveyed 140 industry executives around the world and found that 90% of banking executives believe that the pace of change is increasing the need to innovate, and 65.3% said that they viewed fintech firms as potential partners.
I have talked with a lot of Learners over the past few months, and they definitely see the potential for partnering with fintech firms, but they are are finding it challenging to see results quickly, partially because bankers and fintech entrepreneurs seem to come from different planets. They also continue to be challenged in finding the necessary internal resources and expertise since many cannot afford dedicated full-time innovation teams. Most are trying to make due with what I call “And-I’s”, employees with the words “and innovation” tacked onto their existing job title and full time job duties.
My original definition of Laggards was primarily marked by ignorance; executive teams operating with tunnel vision around a narrow definition of competition limited to just their peer group of similar institutions. My recent experiences and conversations tell me that ignorance is now supplemented with an unhealthy dose of denial as they begin to negotiate their own fintech grief cycle.
Laggards think they are “partnering with fintechs” because they have a few technology vendors and a procurement process. They also are much more likely to view fintech as merely opportunities to reduce costs, rather than also the ability to drive better customer experiences.
Spotlight on Capital One
I’ll be talking to a lot of financial institutions and fintechs this week at Money20/20, but I will be spending some extra time with some of the Leaders at Capital One. In upcoming posts I will interview Tom Poole, Managing Vice President of Mobile Commerce for Capital One about mobile payments and integrated commerce, and Naveed Anwar, their Managing Vice President for Platform, Strategic Integrations & Community about the “platformification” of banking and how they are working with fintechs.
I will also be recording these interviews for special episodes of Breaking Banks, the world’s first global fintech podcast. By the way, it was recently announced that Breaking Banks is now the number one business show on the VoiceAmerica network, with over 2.2 million total listeners in over 100 countries.
So follow along as I report this week from Money20/20 in Las Vegas.
Thanks to Capital One for sponsoring these posts and podcasts and for providing access to their team, but all of the opinions expressed are still mine, all mine. To learn more about Capital One, visit www.CapitalOne.com.