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Shaping the future of finance

The logic of digital change

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I just went through a conversation about my presentation for a forthcoming conference. They didn’t want to provide a prescriptive approach, and just asked what I talked about in general. That’s a challenge, as I once turned up at a conference and they said to me “you have seven hours”. I took eight. So, here goes.

First, we need to get rid of the word disruption. It kinda goes with disintermediation, and I’ve heard that for decades. In the 1990s, all the techie folks said the banks would disappear thanks to the internet. It hasn’t happened and since the 1990s, most big banks have just got bigger. So, disruption is a yawn.

Second, disruption may be a yawn, but the fact is that the internet is changing things slowly but surely, and specifically it began when cloud and APIs allowed start-ups to bootstrap and launch on a shoestring. Now, there are 12,000 start-ups globally getting investments that have been doubling down each year - $111.8 billion last year – and so there is something happening. Don’t be complacent. Nothing may have happened in the last quarter century but something will happen in the next, and only the banks that adapt will survive, as Charles Darwin would say.

Third, there is specifically a fourth revolution of humanity occurring where the people who historically could not be reached by banks are now being reached by technology. The financially illiterate, the folks who aren’t worth it, the financially vulnerable, the unbankable, are all getting to be included because that’s what digital does. In a world where we distribute money physically, you cannot afford to deal with someone in a remote African village; in a world where distribute money digitally, even the guy sitting in a village near the base camp of Mount Everest can trade and transact.

Fourth, because we can reach the unreachable, we can also rethink the product and service. We can provide loans for hours and minutes rather than months and years, because the digital model is dynamic and real-time; the physical model is inflexible and slow. That’s the only reason we dealt with annuity products because in a physical world, we could only deal with changes on a 12-monthly basis and could only deal with people who were profitable in that structure. In a digital world, we can deal with changes in a microsecond for anyone and everyone.

Fifth, that’s why we’re seeing players like Ant Financial really changing the game because they get open banking and platforms, and are operating on that basis in that model. It is why they feel they can deal with billions of people making millions of transactions every second. It is why they have created new ways of thinking about the products and services of finance, placing the technology first and the finance second. It is why they offer loans on a nanosecond basis, provide fund management within a wallet for someone who only has a dollar to save and can get 50 million people to take out health insurance just six weeks fter launching the product.

Sixth, but it’s more than that. It’s about using technology for the good of society and the good of the planet. We have been killing planet earth for a profit and screwing our customers to make a buck. The singular focus upon shareholder returns to get our management bonuses led to a morally bankrupt and socially useless banking industry. That has to change. We need to use this gift of digital transformation to take technology into finance for the good of society and the good of the planet. To create a new, sustainable financial model in other words.

This is best illustrated by Ant Financial’s Ant Forest, where 500 million people play a philanthropic challenge within a super app that has changed their behaviours to be more eco-friendly and green. The result is 100 million trees have been planted in just three years across China, covering 1,000 square kilometres of land and expected to reduce carbon emissions by up to 5% per annum by the end of 2020. That’s a radical way of making change happen.

Finally, you may think disruption is a yawn, but if you ignore Big Tech and 12,000 start-ups who all want to redefine finance for the digital age through apps, APIs and analytics, then you’re sleep-walking your way into the future and probably will mark the death-knell for your bank. The bank won’t go bankrupt, but will just be acquired and merged into the future firms that do get digital transformation. Therefore, at the very least, accept that you need to digitally transform and start doing something.

The question then is what to do. It’s interesting that so many financial executives I’ve met in the firms that are digitally transforming said to me that the previous management felt the same way. They felt they had to transform to this new internet-based world of open banking. They just didn’t know what to do or how to do it. Aha! I say. That’s the theme of my new book coming out next Spring. More on that later but I’ve gathered thirty lessons from leading banks around the world about how to make digital transformation happen in their institutions, and it’s not rocked science. It just takes commitment, leadership, a different mindset and a change of culture, not just an investment in a project.

As you can see, I can talk for hours. However, I liked the flow of this summary and thought I’d just post it here for posterity. Cheers.

Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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