After Dark: A Fintech Christmas Carol
The final After Dark of 2019 saw a show built around Dickens’ A Christmas Carol, lots of questions about where the industry is going and plenty of questionable Xmas jumpers.
Fintech and Charles Dickens.
At first glance, it might seem an odd combination… on the one hand, hypermodern, digitally native banking services, APIs and user experience. On the other, a novella from 1843 by an English literary giant centred on a man named Ebeneezer Scrooge.
Scrooge is a financier, a money lender supporting his local SMEs. Except he’s not doing a great job. Sound familiar?
The book’s narrative is also a redemption story. It’s the transformation of Scrooge from a two-dimensional miser into a man with empathy and understanding of his customers’ pain points, of how they are trapped in a vicious debt cycle due to poor lending practices. Again, sound familiar?
So the final After Dark of the year took all of this to uncover the ghosts of fintech past, present and future. Are you sitting comfortably? Then we’ll begin.
“Jacob Marley was dead, to begin with…"
Our narrator for the evening, The Great Gonzo (because yes, no matter where you sit in the fintech debate, we can all agree that The Muppet Christmas Carol is by far the best cinematic telling) took the stage… looking uncannily like 11:FS Group CEO David M. Brear.
Did Gonzo wear Jordans? Well in our adaptation, he does. Our show, our rules.
On Christmas Eve, Ebeneezer Scrooge is visited by three spirits to show him his past, his present, and what a terrible future he could have if he doesn’t change his dastardly ways.
So who was our Scrooge? Well, as it’s Christmas we didn’t want to single anyone out – so we had three of them:
- Richard Davies, COO Revolut,
- Scott Abrahams, SVP, Business Development & Fintech, MasterCard
- Megan Caywood - Head of Digital Strategy at Barclays
The Ghost of Finserv Past
Our first ghost was played by 11:FS Head of Ventures, Simon Taylor, who focussed on financial services’ analogue past. Remember when you got to speak to a real human being? If you had an issue, that human could empathise and help find a resolution. You trusted your bank.
While it sounds pretty good, our Scrooges were decidedly split.
It’s legacy tech, it’s legacy hiring and the types of skills they’re hiring for.
Richard Davies, COO, Revolut
If you used your card abroad, you had no idea what exchange rate you were getting. The first you knew about it was a paper statement that came through the post,” said Barclays’ Caywood.
Abrahams countered: “I don’t know if it was ‘that’ bad...”
“But the processes were not on the side of the customer. Opening an account was painful,” retorted Caywood.
Why? It’s got to do with the technology underpinning banking, and the discussion moved to whether that is welding banks to the ground, even those who want to build digital services.
“It’s legacy tech, it’s legacy hiring and the types of skills they’re hiring for. And its legacy P&L constraints,” commented Revolut’s Davies, who knows a thing or two about this, having moved to the fintech from an incumbent bank.
He also vocalised what many have thought: the conversation about incumbents and challengers has often been pitched as an adversarial one. The firms that will do the best, according to him, will be the ones that “choose and invest in the best partners”.
The ghost of digitised banking present
The Ghost of Christmas Present takes Scrooge on a journey to see what his peers say about him behind his back, which is essentially a meaner 360 feedback process with ghosts and stuff.
I think people are wondering if it’s now worth the trade off
Scott Abrahams, SVP, Business Development & Fintech, MasterCard
Having turned down the offers of celebrating Christmas with his family, Scrooge is instead forced to watch them celebrate without him.
Like Scrooge, banks are on the outside of their customers’ lives looking in. Our ghost, played by 11:FS Head of Research Sarah Kocianski, went on a journey through the present and asked our panel for their biggest improvements.
“The innovations we’ve seen have enabled access to services to be easy to open, manage and insight into spending. It’s increased the ability to switch and then competition,” commented Caywood.
Davies was more succinct but no less impactful: “fair and frictionless”.
Naturally, thoughts then turned to the conflict between data sharing and how it is being used (and misused) in the digital present and whether the end consumer will see any additional value in fintech future.
“I think people are wondering if it’s now worth the trade off,” said Abrahams.
Caywood added: “It’s all thrown in the T&Cs and no one reads it. We have to ensure how you authorise that data sharing and make it clear to customers and that they can revoke it. ‘It’s in the policy’ isn’t a fair response.”
We’re really just seeing the very start of what open banking can do for consumers.
Megan Caywood, Head of Digital Strategy at Barclays
To keep things more upbeat, the Scrooges outlined the one thing they’re most excited about. And not to get all competitive with our cousins across the pond who think NYC rules, but Abrahams was adamant:
“London has always been a great financial centre. What I’m excited about is a set of fintechs from the city now going global. We should be proud of this city, especially at such an interesting time”.
Revolut’s Davies also called out the real choice SMEs have for services that work for them: “they’d been forgotten for so long and now it feels like this demographic is being served. For 10 years it was a wasteland”.
Fintech future (and some artistic licence)
So as Scrooge had clearly seen, the past was analogue and the present is digitised but the future ahead can be so very, very different.
Onto the stage came the one and only Jason Bates, who rightly mentioned that in the original text, this ghost doesn’t speak, he merely points. Wouldn’t make for a great podcast, so we took a little more artistic licence.
This panel this wasn’t about the death of FS – there won’t be an unloved grave – but there might be a messy decomposition.
“We’ve spent a lot of money backing a lot of new horses… we talk about being a tech firm in payments rather than a card firm. We’re agnostic to how payments get to where they need to – we want to layer services on top of it,” countered Mastercard’s Abrahams.
Caywood cautioned that while a lot has seemingly happened in the last five years, the pace of change will accelerate. “We’re really just seeing the very start of what open banking can do for consumers. Now customers have more choice, more transparency around those choices. It’s going to get very price competitive”.
Scale is always an issue and there are plenty of mid-sized banks struggling
Richard Davies, COO, Revolut
So perhaps the biggest changes surround the intelligent services that sit on top of existing infrastructure. The ones that solve for customer jobs to be done and for particular communities and groups. It also raises the spectre that more non-financial players could take a bigger share of wallet.
“Is that not today?" asked Abrahams. “The tech sector shows us you start with lots of players and over time it consolidates. If banking follows that model then who knows. I do think regulators would step in given the issues we’ve seen over the last decade”.
Revolut’s Davies concluded:“It’s interesting as there’s two ends... I believe niche players can always find a market. But scale is always an issue and there are plenty of mid-sized banks struggling”.
As Scrooge himself said “No space of regret can make amends for one life's opportunity misused”. We have seen financial services’ analogue past, its digitised present and its digital future in all of its glory.
The opportunity of this industry is focussed on creating services and products that serve the underserved and overcharged around the globe. There are fintech founders, CEOs and teams in banks looking to change this industry with purpose and on purpose. They do this not just to line their own pockets but to change the lives of people around the world.
On that note, huge thanks to sponsors for the evening, Mastercard and Soldo, and to our gracious hosts Revolut.
Finally, thank you to the amazing crowd, who dug deep and in the spirit of giving and raised a significant amount for Save the Children, our chosen charity for the night. The organisation does an amazing job all over the globe and these funds will be going to repair 11 schools in Mozambique that were destroyed in the recent cyclone. So thank you to everyone who contributed and all the fintech firms that so kindly donated prizes to the raffle. You rule.
If you couldn’t make After Dark, don’t worry, we’re not going to Scrooge you on this. As an early Christmas present you can listen to the entire show here.