It is not fintech that is growing up, it is the incumbents

I saw an infographic not too long ago that marked 2005 as the year “fintech” started.

Use this time, this space to learn and think. Use the rest of the year to shop.

It’s an arbitrary moment, of course, but it feels about right.

In 2005, it said, Zopa was launched in the UK. Were they the first small tech company? Of course not. I worked at a small tech company way before that. So did many others. We were all in fintech before it became known, it turns out.

Did I think of them as “fintech” when I met them back then? You know… I don’t remember.

Were they the first peer-to-peer lender?

It doesn’t really matter.

The moment in time when new business models enabled by fairly new digital opportunities and championed by smaller, younger and less formal business vehicles … the roundabout happened then. And then the iPhone landed and it all started to go into motion.

But go where?

It wasn’t really that clear to us as an industry for such a long time.

The banks first looked for things to buy.

We all said “change is the new normal”, but we didn’t foresee what actually happened. We said that it sort of meant that we expected some development in the way we achieved our goals. But we didn’t expect drastic changes to these goals, to be honest. Or for us… and that’s important.

We didn’t expect to have to transform ourselves. We expected to have to transform the tools we used. And it was difficult enough, but at the early stage… no one imagined that this could not be “solved” through acquisitions.

Investments are things we understand after all. Balanced risk is something we understand.

I remember being at Sibos all those years ago, and the first start-ups appeared in a setting that was perfectly curated to give off a vibe of university meets high-end store. Because banks were very eager to talk to startups for one of two purposes: to learn from them or to buy them. Sometimes both. Sometimes they bought a little, a minority stake in the small startup. Sometimes they didn’t do it at all and all they did was take. Time and energy and ideas.

Then it started to dawn on us that if all the startups we invest in were going to succeed, that success had to come from somewhere… right?

So the zero-sum narratives of disintermediation began.

Should the start-ups eat our lunch?

Back to Sibos, with these questions at the top of my mind.

And the lesson this time was around partnership. About learning together and letting your established “shop” find acceleration in your new endeavors through a targeted partnership with the right startup.

And the right partnership is the key, we heard year after year at Sibos. Absolutely key. Because the economy is changing. All the learning we have tried to get from the start-ups. We don’t need a bit of it. We need everything.

It turns out that understanding what an API is is not enough. Because once you understand it, you have to praise it. And finance it. And it’s not just the one API either.

And the service you provide? It doesn’t just look different. It is different. With new operational realities, costs, risks, SLAs and new competitors. And a newly demanding and highly informed set of customers. Not to mention the regulators who seem to learn faster than anyone else.

And back to Sibos we went, year after year. And every year the way we engaged in “this space” matured a little.

And the size of “this place” grew a lot.

Because if 10 years ago there were a couple of startups talking about ways of working and partnerships and payments for the future and this thing Bitcoin… with each passing year, there were new horizons to meet. What started as a digital toolbox and an opportunity became, year by year, a deep, complex, mature digital landscape. The economy. Everything.

Turns out we didn’t “drive” it. As bankers I mean. As GSFIs (Globally Significant Financial Institutions, for the uninitiated), we earn it, but we don’t run it.

Don’t kid me.

Don’t dare say “we know”. Let’s be honest with ourselves. If we, the banks, didn’t think we were running the economy, we certainly acted as we did. We were not fooled enough to assume that we will drive, police or own all technical innovation. However, for our early Sibos since this transformation began, there was a palpable sense of being in control of timing and direction in the way all FIs engaged with the subjects. Having the choice between “what” and “when” and “how” when it came to “digital”.

Start-ups were not just pitching their business.

They presented the future.

We had to believe in a life of perpetually fragmented attention before we bought into the value of services designed for interruption.

We needed to believe there was something “in it” for the institution before we gave our blessing to discover currency transactions for the masses.

When did we realize it was a chimera?

I can’t put my finger on it, but looking back at previous Siboses, there were definitely some sessions that in retrospect can be grouped under the collective heading of the “‘I told you so’ series”.

No excuses. All the learning we needed has been here. And it is urgent. It was here too.

So here we are back for another year. To learn. To think. And why not? Buy.

But above all to think.

Because we have no control over why, what or how. We are only in control of what we do in all of this. And how far we play our own hand to have an impact on why, what and how: collectively, as an industry, at an institutional or indeed individual level.

Not as the sole author of a digital future, but as an actor and active participant in an economy we serve but do not own. In an economy that is developing faster than our industry’s learning. Which is bad both for our ability to earn and for our commercial relevance, frankly, so we’re encouraged to pay attention. For our own and the organisations’ sake.

And this year, Sibos says yes OK, well done, you’ve learned a lot in the last decade and a half, but the world isn’t waiting for you. It continues to shift. So use all the things you’ve learned so far to think about your role in a subscription economy. In an economy that continues to move along the lines we have already discussed, but faster than ever.

Another? I hear the banker’s unspoken groan.

Another thing to learn?

In a way.

It is the same. That’s the next thing.

All the things we’ve learned over the past decade and a half are certainly helpful for you to begin to understand this thing here and your place in it. But don’t kid yourself, because the next one will be upon us before you know it. So use this time, this space, this week to learn and think. Use the rest of the year to shop. And we will meet again for the next step, as an industry, to think and learn together as we do every year.

God, I love Sibos.

#LedaSkriver

Leda Glyptis is FinTech Futures’ resident thought provocateur – she leads, writes on, lives and breathes transformation and digital disruption.

She is a recovering banker, lapsed academic and long-time resident of the banking ecosystem. She is chief client officer at 10x Future Technologies.

All opinions are her own. You can’t have them – but you’re welcome to debate and comment!

Follow Leda on Twitter @LedaGlyptis and LinkedIn.