4 Takeaways from Money16

Jaakko Ollila

The Money16 event took place at Helsingin Pörssitalo on May 25th. Here are the highlights from a corporate lending perspective from a string of international participants, such as Jason Bates (Mondo), Josh Levin (Citigroup) and Gianluca Corradi (Simon-Kuscher & Partners).


1. Banks need new strategies

Ilkka Ruotsila from Accenture covered their research claiming that ca. 50% of banks' profits are at risk due to competitive forces and changes in regulation, such as PSD2. Accenture proposes that banks should select a particular strategy with alternatives ranging from platform provider role to a complete end2end service provider. According to Accenture, each strategy contains its own risks, investment levels and potential rewards. Bigger banks should not rest on their laurels but rather actively invest in a new course, based on their individual starting points and legacy market positions.

“50% of banks' profits in 2015 are at risk due to competitive forces and changes in regulation”

2. Corporate banking is the next ripe and ready market

Josh Levin from Citibank presented the wealth of market with data that highlighted billions of euros of investment flows to different areas of FinTech. However, Josh noted that most of the FinTech startups operate in B2C markets, particularly payments area and digital retail banking. Corporate banking in turn has thus far seen relatively little innovation, with the exception of corporate lending. This is about to change in the next years as the investment levels in FinTech accelerate in all categories.

3. UX trumps everything

Jason Bates from Mondo presented a refreshing, hands-on view to their digital banking operations in UK. Mondo is targeting millennials with their fully digital banking services. No retail branches, all services are provided digitally through slick and easy-to-use apps and User Interfaces. Mondo is offering light-weight services with quick and easy sign-up options. Jason highlighted that changing bank accounts and bank relationships tends to be a cumbersome consumer experience. Mondo wants to give this experience a proper shake.

4. Banks bet on their customer relationships

The most acute insights were provided by Gianliuca Corradi from Simon-Kucher & Partners. Gianliuca concluded that most FinTech entrants have excellent services and platforms, but they might yet lack scale, market awareness and consumer/ customer relationships. Handling and transacting with money requires trust that traditionally has taken years to build.

“Handling money requires trust that FinTech entrants have started to build”

On the contrary, customer relationships, trust and brand are the cornerstones of incumbent bank business. The traditional banks know their customers' needs inside out thanks to decade-long customer relationships. As banks remain confident with their good customer relationships, new FinTech services keep gaining trust.

How quickly can the FinTech entrants establish these relationships? This remains as the crux of a sustainable industry change.

Money17 is on its way. Check out Money17's Twitter account for more updates.

Author

Jaakko Ollila

Head of Finland

The author is Head of AREX Finland