I was having a nice relaxing Sunday, when alerted to a tweetfest taking place between industry heavyweights Simon Taylor (an ex-banker) and Mariano Belinky (a banker). It all started with:
Fintech didn’t disrupt banks but banks are slowly dying. Creating an ever growing opportunity for #fintech
— Simon Taylor (@sytaylor) September 18, 2016
@sytaylor low int rate env, reg costs, restruct charges… look for the long term cycles. Some rev pools shrink, others grow. Not dead yet
— (((MarianoBelinky))) (@belimad) September 18, 2016
Soon others joined the conversation like Ajit Trapatha (a consultant):
— Ajit Tripathi (@triptananda) September 18, 2016
Jason Bates (a neobanker)
— Jason Bates (@JasonBates) September 18, 2016
and Brett King (not sure what he does).
— Brett King (@brettking) September 18, 2016
I’d love to give a heads up for other participants, but then this blog would just be a long series of embedded tweets. Instead, I relaxed, marked the conversation to blog about it, and snoozed off to the snarkiest program on TV Come Dine With Me.
Now it’s time to talk a little about my take on this. First, I’ve blogged about Fintech and Banking lots already:
- Are we going through a Kodak/Nokia moment in banking?
- Is it Fintech or Techfin (Part One)
- Is it Fintech or Techfin (Part Two)
- Eventually everything will become a bank
- The most hated #Fintech bingo buzzword is “disruption”
- Fintech 1, 2 and 3.0 … there’s an elephant in the room and it’s under attack
The conclusion that is clear is that banks are not dying and Fintech is not disrupting them. Instead, Fintech is supplementing banking and reaching areas that banks don’t serve well, like small businesses. The supplementary piece is in the areas of connecting people and machines peer-to-peer, to create a new network of value exchange. That value exchange structure is going to have billions of devices (about 50 billion+ by the end of the decade) transacting trillions of transactions in real-time 24/7/365, for amounts that will often be worth less than a cent.
That’s the new ValueWeb we becoming more familiar with, and is based upon a lot of new technologies working on the banking rails.
The banking rails also need to change, as they offer a pure cross-border payments infrastructure and that’s not what people want in the internet age. Equally, banks must reconsider their role as a monetary store to a value store. The difference is subtle but key, as money and payments is not the future internet of value. It’s also photographs, memories, ideas, stories, words, friendships and anything else that is of value to you, me and our globally connected real-time world.
In other words, banks are still a core foundation of the NEXT generation of value stores and value exchange structures, that include a lot of new players. Players who offer functions and processing as a business (Stripe) of value marketplaces where banks are a key platform player (see more here).
This means that banks do need to adapt to be a player in this new tech world, but then most have had to adapt to be part of the new tech world. That means both Simon and Mariano are right. Simon’s right as banks need to adapt and change, or die; Mariano’s right, in that most Fintech is not threatening banking but supplementing and assisting in making it easier to do across borders globally, in an extended value exchange and store structure.