As someone who has witnessed the rise and rise of fintech in recent years, I’m often asked what I think of this new industry. Is ‘fintech’ hype or a bubble? Is there really innovation happening in financial services?
Fintech is not a new term. What was the world’s first cash machine in 1967 if it wasn’t a tech innovation in FS? It was this type of plea I used to have to roll out to comms colleagues in other sectors a decade ago when I was working in a PR team that was dedicated to tech companies in banking and finance. Yawn. But now something has changed.
Fintech is a word that people and businesses want to be associated with, actively calling it out in their brand positioning.
An obvious development is the pace of technology and the resulting consumer demand for better, faster and cheaper financial services. Also the acknowledgement that technology won’t simply automate onerous back office processes – it fundamentally impacts business models and an ability to compete.
The impact for fintech businesses is this: it is no longer sufficient or even desirable to appeal only to IT operations within financial institutions.
Finally for the financial services sector, technology is a boardroom issue.
Heads of Digital and Innovation are a rapidly growing leadership role in FS, long after many other sectors underpinned by tech, such as telecoms and retail.
For fintech businesses operating a model to support the incumbents, this nascent trend means that they suddenly have far greater bargaining power. A seat at the table in strategic discussions. Corporate venture capital is booming in financial services as institutions seek investment opportunities that will ultimately save their bacon. Tech has more influence on FS firms than ever and comms strategy must exploit this opportunity and talk to business, not tech, issues.
Of course, the other route to market is to disrupt traditional models and deliver innovative services directly to (mainly consumer) customers. The Government’s effort to open up financial services is playing a huge role in enabling fintech firms to flourish in the UK. The comms challenge at this end of the sector is how to differentiate and cut through what is already becoming a crowded marketplace.
The industry’s outlook is a hotly debated topic with the likes of Brett King stating the bank of the future will be a tech company. I’m not convinced it will be that simple and, I believe it is telling, that in spite of the last eight years of turmoil and scandals, businesses and individuals retain high levels of trust in financial services. What will emerge in the next few years will be a better understanding of what is bluster and what is genuine effort to innovate.
Perhaps the only certainty right now is that financial institutions can no longer give lip service to fintech.