For this article we invited Adri Odding, consultant business and IT, to share his thougts and knowledge on the current state of the financial landscape and how FinTech plays a role in it.
A little while ago, I wrote a blog titled “FinTech Unite”. At that time, the financial industry was shaken up by the announcement of PSD2, having all the involved parties asking themselves “what will this mean?”
The ECB, state banks and systematically important banks started to consult together. The established order asked themselves: “How can we approach this in the best way possible, while remaining as unscathed as possible?”. As well as an increase in competition between themselves, FinTechs were in the starting blocks, ready to take a significant amount of functionality away from the banks. After all, PSD2 was the one making all of this possible.
Meanwhile a few years have passed and, as it turns out, the implementation of PSD2 has been delayed and people have been discussing on how to make bank and account information available for a long time; it still remains unclear, with about 5 standard API propositions, that would enable this data-exchange, pending. Brussels must come to a decision and whether all member states will comply remains to be seen.
Additionally, the legislation hasn’t been implemented in all countries, one of them being the Netherlands. Propositions are ready, yet remain subject to questioning which will lead to even more delay. Sometimes I’m thinking that this delay is beneficial to banks, but don’t forget, it’s also beneficial to FinTechs, as they also have had the time to form a clear vision of where the industry is heading and have, except for on APIs, done their homework just like the banks have.
But this is where it starts to get interesting. Where is the real danger coming from? Not from the banks and not from FinTechs, but from the DataTech companies with the real money. Companies with the likes of Google, Amazon, Facebook, Apple, Alibaba, etc. All of them being large internet companies, possessing consumer data and money. Meanwhile, these companies are already showing interest in financial services and even putting their interest into action by providing pay&wallet functionalities. If the DataTech truly do convert to banking and start offering their customers the ease of financial activities, the consumer banks are in danger of facing severe losses.
Of course, more functionalities are of importance here, functionalities that are currently already being provided by FinTechs, such as payments, budgeting, automatic saving for pensions, investing, borrowing and what to think of connecting all your payment receipts to your bank account, enabling you to see exactly where the bananas are the cheapest. All these smart FinTech functionalities (apps) are currently somewhere in between BankTech and DataTech…
Which side will FinTech be pulled towards?
By Adri Odding, consultant business & IT