Millennials and the future of finance: A different kind of trust

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A generational shift is underway, which is challenging and reinventing notions of trust in financial services. The Millennial Generation, comprised of those people born between 1982 and 2004 (average age 22), lies at the heart of this shift.

Millennials_option 2

A couple of months ago, i spotted the twitter stream and website of Wharton FinTech, the first student-led FinTech initiative committed to education, career development and idea promotion by connecting innovative, established, disruptive and proven FinTech enterprises with students and industry professionals.

WhartonFintech Logo

I got into a conversation over Skype with Daniel McAuley and Steve Weiner, the two co-founders of Wharton FinTech, and discovered a rich community of young Wharton MBA students who were passionate about FinTech. They organise study tours in the Valley and elsewhere, have a solid blog, and more importantly have a refreshing view on which financial services resonate with Millennials and which not.

We started an online collaboration to produce a research paper, and after a couple of iterations quickly decided that the underlying theme had to do with trust. A different kind of trust.

Trust is the most important currency in finance. It is fundamental to the smooth running of every financial system in the world, and that is always likely to be so. However, a generational shift is underway that is challenging and reinventing notions of trust in financial services.

Growing up during the global financial crisis and a sluggish period of recovery thereafter, the Millennial Generation is particularly mistrustful of established financial brands and institutions. The effect of this generational shift has been explored by a number of groups, including the innovation group, Scratch. Their Millennial Disruption Index concludes that banks are most likely to be disrupted by Millennial consumer preferences, and are facing massive challenges in terms of approach towards customer acquisition and user experience.

Millennials believe that the way we access money and pay for things will be completely different five years from now. But how do companies understand what trust really means to this generation, and more importantly, find ways to earn and retain it?

The paper explores three main themes:

  • Trust in technology: Millennials trust technology rather than face-to-face relationships and the traditional ‘bricks and mortar’ on-premises user experience. They want entirely new digital products that are relevant to their daily lives. However, there is a fine line between trust in technology and over-reliance on it, and information and identity security is an area of risk that needs to be managed.
  • Trust in networks: FinTech startups built on the back of social networks have a distinct advantage over incumbents when it comes to customer acquisition. By focusing on user experience and viral or ‘word-of-mouth’ marketing, these young firms are often outperforming their better-funded rivals. For those financial services firms looking to gain market share within the Millennials segment, this is an extremely important approach to master.
  • Trust in social causes: Millennials demonstrate a stronger likelihood to buy a product from, or indeed work for, a company with a defined social or environmental mission. They trust companies with social or environmental objectives more than those that are perceived as operating solely for profit. While declaring affiliation to a social cause can attract customers and improve engagement, companies must be careful not to mislead Millennials – they tend to do their research to make sure a company’s claims can really be justified.

Socio-economic and generational dynamics play a critical role in the evolution of financial services. As companies reinvent the way people interact with their money, finance is becoming faster, cheaper and more efficient for individuals and businesses.

The paper can be downloaded here (PDF) and provides valuable guidance on what financial services companies can and should be doing to capitalise on this major generational shift in consumer preferences, and create new opportunities for growth.

Together with Power Women in FinTech, Millennials will play an important role in this year’s Innotribe programme at Sibos, taking place in Singapore from 12-15 October 2015. In preparation for the event and the discussions that will happen onsite at Sibos, the paper examines how the Millennial Generation will help shape the future of finance.

Petervan’s Delicacies – Week 22 June 2015

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Week-25 of Delicacies: What a rich week that was. But i stick to max 5 articles that i found interesting and worth re-reading. Handpicked, no robots. Minimalism in curation. Enjoy!

Rebel Jam 2015 Recordings and Rebel Jam LIVE!

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Rebel Jam leaderboard 3

On Friday, June 26 at noon Central European Time, we kicked off our 24 hour Rebel Jam 2015. The recordings of all the sessions are now available here (*). There was a lively twitter stream: check out hash tag #rebeljam15

(*) We had a small technical glitch for the last sessions of the Rebel Jam, resulting in some recordings missing. We are contacting the speakers 1-1 to re-record their session. Sorry for that.

Rebel Jam 2015 was a co-production by Corporate Rebels United, Rebels at Work, and Change Agents Worldwide.

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Rebel Jam 2015 was sponsored by RELEVENTS, committed to enacting a movement of positive change in the business community.

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And together with RELEVENTS, we are proud to announce the first Rebel Jam LIVE!, an event pavilion where i community will meet for the first time since its existence in a face to face setting. Mark your calendars!

Rebel Jam LIVE! Friday 18 Sep 2015 in Sacramento, California. 

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Petervan’s Delicacies – Week 15 June 2015

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Week-24 of Delicacies: Max 5 articles that i found interesting and worth re-reading. Handpicked, no robots. Minimalism in curation. Enjoy!

Powerwomen in FinTech

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While technology and business models are changing fast, the issue of gender diversity in financial services – particularly at senior leadership levels – is still lagging behind.  A Financial News analysis of Dow Jones Venture Source and Factiva data reveals that, of the 20 European FinTech companies that received the largest venture capital investments in 2014, none had a female chief executive.

A couple of months ago (Nov 26, 2014), I got a DM tweet from @sammaule saying “Been asked to put together a list of top 100 women in FinTech globally for conference in March. Looking for your input.”. I reached out to Sam and suggested we’d make this a major design theme for Innotribe Sibos 2015, and produce a joint whitepaper on Powerwomen in FinTech.

It was the start of a fantastic collaboration with Sam and Christine Duhaime @cduhaime from Digital Finance Institute in Canada, culminating in the release of the paper on June 3, 2015 during at Digital Finance 2015, the first Canadian FinTech conference, in Vancouver.

We did not want it to be yet-another-list. We did not want it to be another girl-geek-power list. What we wanted was a list of women who make a difference in financial services. Whether they were having C-level roles in their organizations or were change agents deep in the fabric of their institutions. Whether they came from big or smaller financial institutions, startups, investors, or VCs. We had the ambition to have a worldwide list.

We compiled all existing lists. Did crowdsourcing via twitter and other social media. We had a good list, but found it a bit light for regions such as South America, Africa, and Asia. We reached out to our contacts in those regions, and got additional suggestions.

We ended up with a list of 437 Powerwomen in Fintech, and could have kept going.

women list graph

The paper draws upon existing research to highlight the reality of today’s situation in FinTech, and it provides recommendations to achieve and accelerate greater gender balance within the industry. A selection of interviews and profiles sit alongside the index, highlighting and celebrating the success stories of just some of the inspiring women who are leading the way and serving as role models to others.

End August we will do an update, and have some more in-depth interviews with 25 Powerwomen from the list.

The paper serves as an eye-opener on the gender diversity gap, in advance of the debate that will continue at Sibos in Singapore, from 12-15 October. Diversity will be one of the main topics covered by the Innotribe@Sibos 2015 programme. A number of the inspirational leaders featured in the Power Women in FinTech index will be involved in Innotribe sessions to discuss the findings of the paper, and make sure the voice of women is heard.

The paper can be downloaded and is a compelling read for anyone involved in the financial industry and beyond.

Fintech 1.0 is dead. Long live Fintech 2.0

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There is a great new paper out called “The Fintech 2.0 Paper: rebooting financial services”. You can download it here.

fintech 20

The paper has been created by Santander InnoVentures, in collaboration with its partners Oliver Wyman and Anthemis Group.

It is mandatory reading, and it resets the bar on what innovation in financial services should be all about.

Maybe some history first. Sean Park (@parkparadigm) from the same Anthemis was probably the first who mentioned the idea of Bank as a Platform with a nice Prezi presentation http://www.parkparadigm.com/2009/10/29/platforms-markets-and-bytes/ in september 2009.

Since then we all have seen that story unfolding, up to some months ago where the slides from CB Insights went a bit viral.

Unbundling-of-a-bank-V2 by CB Insights April 2015

This is looking at the home page of Wells Fargo, but i have seen versions for HSBC and others. The message here was that we witness the disaggregation or uberization of financial services and that the new capability is to be able to horizontally source pinpoint functionality and mix and match these into new experiences. That was Fintech 1.0. It’s a vibrant startup space, and for sure full of investment, accelerators and incubators. But it’s boring and missing the big picture.

The new paper helps us seeing the big picture. From the foreword:

“Many fintechs have succeeded but today they are still operating only at the edges of banking. To help engineer more fundamental improvements to the banking industry, they must now be invited inside, to contribute to reinventing our industry’s core infrastructure and processes. That can succeed only as a collaborative endeavour, with banks and fintechs working together as partners.”

There are many examples in the paper that illustrate that. Here is an example of streamlining securities settlement:

Securities

However, many financial institutions are still stuck in the pre-Fintech 1.0 era: they just start to see the light that Sean Park was shining on the vertical disaggregation of financial services. That is seven years after the first signals were clear in the market. They simply have not adjusted their clockspeed to the 21st century economy speed.

Other institutions were more pro-active and created corporate investment funds (some of them 100-200M USD or more) and/or partnered with accelerators and incubators. Probably most of that money is gone now. And to be honest, i don’t see much innovation that is actually shipped into the market. At best we ended up with some well advanced prototypes and we struggle to get them out of the sandbox. To quote myself: “Innovation that does not ship into the hands of a paying customer is fantasy”

The new paper shifts the innovation agenda. All the problems and opportunities in the paper are of a collaborative nature. Maybe not in a way that the authors intended.

  • It looks from the paper that the conversation with startups has moved on from competing with the banks to collaborating with the banks. I can subscribe to that, it’s a clear message i have heard from the startups and the banks during all the startup competitions i have been invited to for coaching and judging.
  • But many of the problems and challenges in the paper can only be solved through a collaborative effort by the industry at large

Just a couple of days ago i was in a meeting with heads of innovation of major financial institutions. One of the messages was that we as an industry have to be more bold, set our competitive agendas asides and join forces to compete with the next generation of competitors that are not the startups at the edges but big technology companies with very deep pockets and with the super disruptive capability of becoming ecosystem/platform orchestrators where banks will rather be the slaves than the masters.

FinTech 1.0 FinTech 2.0
Products Processes
Tactics Strategy
Doing the existing better Do brand new
Efficiency game Value creation game
At the edges At the core infrastructure
Key Performance Indicators Key Capability Indicators
Vertical Horizontal
Competition Collaboration
Prototypes Shipped Products
Transactions Enable Commerce

The new paper inspires me. I got somewhat bored of hearing the startups doing the same standard pitches, and attacking/leveraging/whatever one particular area of financial services. I am hungry to see startups wanting to play the big game. The game of infrastructure. Of re-inventing processes rather and putting lipstick on or around the pig.

In that sense FinTech is dead. The game is up. It is about enabling commerce. It’s about better banks and better banking with a greater societal awareness to enable commerce and supply chain. Not just transactions in the back-office.

Petervan’s Delicacies – Week 8 June 2015

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Week-23 of Delicacies: Rich harvest this week. But still max 5 articles that i found interesting and worth re-reading. Handpicked, no robots. Minimalism in curation. Enjoy!

Rebel Jam 2015 on Friday, June 26

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On Friday, June 26at noon Central European Time, we will kick off our 24 hours of speakers sharing stories, observations and emerging practices about creating change and reshaping the future of work.

We will be using WebEx for this on-line event

Log-in information

Link to schedule of speakers and topics

We only have a few speakers slots available. If you are interested to share your change/rebel story, go to the link of the schedule and reserve your 30 minutes, or contact corporaterebelsunited@gmail.com

Kickoff times for 24-hour online event

  • Europe (CEST): noon
  • United States (EDT); 6 a.m.
  • United States (PDT) 3 a.m.
  • Australia (EST): 8 p.m.

Twitter handle: #RebelJam15

Questions?  corporaterebelsunited@gmail.com

Produced by:

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Change Agents Worldwide

Proudly sponsored by RELEVENTS, committed to enacting a movement of positive change in the business community.

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Mark already your calendars: together with RELEVENTS we will organize our first live event:

Rebel Jam LIVE!

Friday 18 Sep 2015 in Sacramento, California. 

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Petervan’s Delicacies – Week 1 June 2015

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Week-22 of Delicacies: Max 5 articles that i found interesting and worth re-reading. Handpicked, no robots. Minimalism in curation. Enjoy!

Petervan’s Delicacies – Week 25 May 2015

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Week-21 of Delicacies: Max 5 articles that i found interesting and worth re-reading. Handpicked, no robots. Minimalism in curation. Enjoy!