Fintech Week Lithuania Overview: 5 Insights from Keynote-Speakersby Company Announcement June 24, 2020
This year the Fintech Week Lithuania took place online, and it still managed to provide a solid discussion platform for experts from all over the world. And the discussion was necessary, as the banking industry, as well as the global economy, are facing tremendous challenges and changes, that are on par with the 2008 financial crisis.
Genome participated in the conference, and we have decided to share some of the most thought-provoking ideas voiced during the Fintech Week regarding the future of banks and Fintech, and the impact of COVID-19 on the industry.
Traditional banks are not being disrupted by technology
The lockdown that followed the coronavirus outbreak showed that Fintech companies were overall much better prepared for this scenario than the other banking institutions. This once again made some people think that traditional banks are becoming a thing of a past and will be replaced by tech-savvy Fintechs.
But as Chris Skinner, the author of such books as “Doing digital” and “Digital human” pointed out, some banks are going above and beyond to keep up with technological innovations. For instance, in 2018 JPMorgan Chase spent $10,8 billion on technology, and next year its technology budget was $11,4 billion. Meanwhile, the total European Fintech investment reached $24 billion in 2018, making it equal to JPMorgan Chase’s two-year tech budget. Thus, Chris Skinner believes that traditional banks will not be destroyed by the technology, but instead transformed by it, and, ultimately, “rebooted with Fintech being integrated into the core of banking”.
BAAS and Open Banking acceptance grows, and Fintechs are changing the business models
Due to the pandemic, some banks had to change the way they operate in a matter of days, and some of these changes require partnerships with more technologically advanced companies. So, the lockdown pushed more institutions and countries to embrace banking as a service (BAAS).
Also, as the CBDO of Inventi Erika Maslauskaite noted, right now a lot of regulatory institutions are working on ways the governments can launch the Open Banking services. It is expected that half of the G20 countries will enable Open banking this year.
Benjamin Ensor, the director of research at 11:FS forecasted that Fintechs, especially the startups, will be shifting to a b2b morel, as direct-to-consumer companies struggle to scale up in fragmented Europe. Meanwhile, more Bigtechs will come up with their financial services thanks to BAAS spread.
What technologies helped Fintechs to prepare for the COVID-19 scenario.
Fintech companies mostly had it easier during the first hit of the lockdown than the traditional banks. The reason for it is, as the co-founder of Bankera Vytautas Karalevičius explained, that Fintechs were prepared for it – as they provide their services online and have digital payment methods.
And Fintech companies didn’t really need to develop new technologies to meet the lockdown service requirements. They just had to utilize more of the existing ones, like cloud-based, machine learning, and customer experience technologies – emphasized Douglas Mackenzie – the head series producer and host of Fintech Finance. He believes that cloud-based and KYS technologies will get more investment in the future, and traditional banks should pick up on this trend as well.
Traditional banks need to learn how to change correctly
It is safe to say that the pandemic made financial institutions finally realize that digitalization is a vital part of their survival. But it’s not enough. Chris Skinner brought up an important point that traditional banks have a very different structure and background than Fintechs. The former usually have hundreds of thousands of employees, branches all over the globe, and years history, while the latter emerged as the result of the 2008 financial crisis, have relatively small staff teams and prefer online banking to branches.
Therefore, it is essential to restructure the traditional financial firm around a digital platform, and also to reskill existing employees so they could become tech-savvy. Talking about the main skills that will be in demand in the nearest 5-10 years within the industry, Dr. Saulius Masteika – chair of Fintech study program at Vilnius University, – named leadership, tech awareness, leadership, and risk-taking skills as crucial ones. And AML Director for the EMEA at ACAMS Shilpa Arora added critical thinking, as well as decision making to the list.
Cooperation between banks and Fintech – to be or not to be?
As mentioned before, the payments’ experts are expecting that the popularization of BAAS and Open Banking will enable more cooperation between traditional banks and Third-Party Providers. But there are also doubts. As Douglas Mackenzie expressed an opinion that the pandemic derailed a lot of collaborative approaches between the two, and that now banks will try to work on self-improvement. This means that some exciting innovations will be put on a halt.
The COO of Contis Andy Patton also reminded that some banks and Fintechs weren’t quite satisfied with existing collaborations, with 50% of FinTech companies believing they hadn’t found the right collaborative partner. However, he noted that the pandemic might change the situation and we will see more partnerships around liquidity and lending platforms.
At the end of the day, we can’t be 100% sure in any forecasts, as the COVID-19 pandemic may hit the world with another outbreak wave. But what we can do now is to use our resources to deal with the most severe pandemic effects. For instance, we at Genome offer free business and merchant accounts with monthly fees temporarily canceled for low-risk companies as a part of our COVID-19 initiative.Subscribe to the most important Fintechnews in Estonia, Lithuania and Latvia.