12 May 2017
Banks can not wait for the technological storm to lie down
Banks have to make some hard decisions if they want to survive in a new technological era. At least, that is what Holland FinTech CEO Don Ginsel thinks. His organization tries to bring the advantages of financial technology under the attention of the financial public. “There is little love for technology in the financial world, while everything is about technology these days.”
When people talk about the evolution of the financial world, fintech is an often-used term. That is not surprising given the technological development in the financial world. But fintech is not a tangible thing, because it is a term for all kind of developments. Fintech became a hype, according to Ginsel. “Everybody is talking about fintech, but a lot of people do not even know what it actually is. We can work with that. If everybody thinks that they need to know everything about fintech, we can get their attention and point out the things that really do matter, like specific issues and ways to solve them by using technology,” Ginsel says.
Ginsel feels like he needs to convince people that there is more than just the term fintech. “Fintech is a hollow phrase, but we can use the hype to change the mindset of people. In the financial world, people still tend to look at technology as necessary evil. But they should embrace it. Within financial companies, people often speak about ‘the business’ and ‘IT’ as two separate things. That is the whole problem. They should understand that they are doing their customers deficit when they ignore the developments.” Fintech might be a ‘hollow phrase’, but Ginsel says it is a phrase that represents a new wave for financial services. This new wave may be perceived as a storm, but is an opportunity for the traditional parties as well.
“The biggest advantages of this wave are the underlying technologic opportunities that can disrupt the world we live in. It is not that we did not have these opportunities before, but the needed tools are now available for everyone,” Ginsel says. If someone tried to start a technological company earlier, he needed a huge amount of money because he needed to build a data center. Nowadays almost everyone can enter de technological market with ‘only’ a couple of thousand euros as seed money. “And with more people entering this market, the creativity is growing. When you connect all these innovations, new solutions will arise. That is what is going on right now, in the new wave that people call fintech.”
But what will be the role for traditional parties with all these new parties in the market? “Their role will change significantly. The big financial parties are used to do everything in-house. They develop services and products and are trying to sell those. That is the main focus. On the side, they give a little customer advice about those products. But it is hard to be a product factory and to give honest advice as well, because the one may affect the other. Banks should decide what it is that they want to do in the future. Do they want to be a product factory or an advisory institution? This differentiation is required,” states Ginsel.
If a bank decides to focus on the ‘product factory’, they need a partner to take care of customer services. “I think parties can create the best products and services when they connect with other specialists as much as they can. For example: one party takes care of the product development, while the other party handles the clients. This sounds good, but it requires awareness of their new tasks from all the parties. They should get away from the idea that they have to do everything by themselves,” Ginsel says.
So, if traditional parties want to survive the current storm of developments, some tough decisions are required. It can be frightening, but moving with the developments of the market can actually help financial institutions re-invent themselves and be more relevant for end consumers. Either way, being open to the possibilities is way better than waiting for the storm to lie down – or getting swallowed by it.
Don Ginsel, CEO Holland FinTech
“There is little love for technology in the financial world, while everything is about technology these days.”
- Industry insights